China’s manufacturing sector showed signs of contraction in January, with the purchasing managers’ index (PMI) falling to 49.1 from 50.1 the previous month, according to data from the National Bureau of Statistics (NBS). A reading below 50 indicates a contraction in the sector, signaling a slowdown in China’s economic recovery.
The decline in the PMI was driven by weak demand, as the new orders subindex fell to 49.2, down from 51 in December. Additionally, the subindex for new export orders dropped to 46.4 from 48.3, highlighting a reduction in external demand for Chinese goods. The construction sector also faced a decline, with the subindex for non-manufacturing dropping significantly to 49.3, compared to 53.2 in December, suggesting a slowdown in the services and construction sectors.
Further data from the NBS indicated a 3.3% decline in industrial profits for the year 2024, although December saw an 11% increase in profits. Profits for government-owned enterprises fell by 4.6%, while those for foreign-invested businesses, including those from Taiwan, Hong Kong, and Macau, decreased by 1.7%. Conversely, profits for private businesses showed a modest increase of 0.5%. This reflects a challenging year for China’s industrial sector, with government-owned companies and foreign-invested firms facing particularly tough conditions.
