China’s Caixin PMI Shows Slower Factory Activity Decline in Jan

On Wednesday, a private sector poll revealed that China’s factory activity declined more slowly in January after the country lifted Covid-19 curbs late last year, easing pressure on manufacturers. 

The Caixin/S&P Global manufacturing purchasing managers’ index (PMI) increased to 49.2 in January from 49.0 the previous month, but fell short of the 49.5 predicted by Reuters.

This is the sixth consecutive monthly decline; the monthly growth/decline index threshold is set at 50.

The Caixin poll focuses on small enterprises and coastal regions, which contains a number of exporters, in contrast to a better-than-expected government survey on Tuesday, which mostly focuses on major and state-owned firms and manufacturing activity swinging back to growth.

A faster-than-expected “exit wave” of Covid-19 infections, according to economists, may indicate that the worst of the economic downturn is over. They are optimistic about the economy in the first and second quarters, but warn that structural problems in the property market and sluggish foreign demand will dampen the country’s long-term growth prospects.

Sub-indexes for both new orders and output continued to fall, although at a lesser pace, suggesting that customer demand and factory operations were still feeling the effects of the Covid outbreak and muted market conditions.