Workers produce garments for export to overseas markets at Sihong Guoshun Garment Co., Ltd. in Weiying Town, Sihong County, Suqian City, east China’s Jiangsu Province, 23 January 2025.
Cost photo | Nuphoto | Getty Images
China’s industrial activity contracted unexpectedly in January, reversing the expansionary momentum of the past three months, partly due to a slow season ahead of the Lunar New Year.
The official Purchasing Managers’ Index for January stood at 49.1, data published by the National Bureau of Statistics Monday showed.
This figure is below a Reuters poll’s estimate of 50.1. The PMI in December stood at 50.1, while in November it was 50.3. A PMI above the threshold of 50 indicates an expansion of activity, while a PMI below this threshold indicates a contraction.
January’s manufacturing PMI tends to be weaker as migrant workers return to their hometowns ahead of the Chinese New Year, which falls on Jan. 29, said Hui Shan, chief China economist at Goldman Sachs. .
China’s non-manufacturing PMI, which measures services and construction activity, fell to 50.2 in January from 52.2 the previous month.
Furthermore, China’s industrial profits jumped 11% in December from a year earlier, growing for the first time since July.
Corporate profits are recovering from a sharp 27% year-on-year fall in September – their biggest decline since March 2020 during the Covid-19 pandemic. They had fallen 7.3% year-on-year in November and 10% in October, as the slowdown in the real estate sector and the bleak income outlook continued to weigh on consumer demand.
Industrial profits are a key indicator of the financial health of factories, utilities and mines in China.
Industrial profits for the full year 2024 fell 3.3% from the previous year, extending their decline to the third consecutive year.
The world’s second-largest economy reached its official annual growth target of 5.0% last year, thanks to a series of stimulus measures. Economists pointed to industrial production growth outpacing retail sales, underscoring the country’s supply strength as domestic demand remained weak.
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