Economy

Chinese Factory Activity Contracts For Second Straight Month - PMI

Chinese Factory Activity Contracts For Second Straight Month - PMI”

China's factory activity contracted for a second consecutive month in January, with the pace of the downturn picking up speed, due in large part to the effects from the ongoing trade war with the United States.

Data from the National Bureau of Statistics on Thursday shows that the official Manufacturing Purchasing Managers' Index rose slightly to 49.5, up 0.1 point from December. Analysts surveyed by Reuters had forecast the gauge would dip to 49.3. Articles appear on euronews.com for a limited time. Manufacturers also continued to cut jobs, a trend Beijing is closely watching as its weighs more support measures.

This month, the non-manufacturing PMI rose 0.9 points from December to 54.7, and the composite PMI output index rose 0.6 points to 53.2, the NBS data showed.

New orders - an indicator of future activity - pointed to further pressure in coming months.

Despite weaker orders, the output sub-index edged up to 50.9 from 50.8. -China trade deal. However, the country's manufacturing data came in below expectations.

In other news, foreign investors swarmed into A shares through Stock Connect in January, buying stocks worth of the record-high 60.69 billion yuan in a single month, as Bloomberg reported that Chinese yuan-denominated government and policy bank bonds will be added to the Bloomberg Barclays Global Aggregate Index.

Veteran China watchers typically advise taking its data early in the year with a pinch of salt, suspecting the trends may be distorted by the timing of the Lunar New Year holidays.

China's week-long Spring Festival holiday will start on February 4 this year, during which tens of millions of Chinese will travel at home or overseas for family reunions and celebrations.

Bleak data ahead of an annual meeting of parliament in March could raise the possibility that Beijing may speed up or intensify its stimulus efforts in 2019, after a slew of measures previous year that analysts said were modest by Chinese standards.

Not all PMI surveys were gloomy.

Even then, some economists say support measures may only steady activity in China and not produce a strong rebound in its demand like that which helped pull the global economy out of recession after the financial crisis.

Trade-focused Asia appears to be suffering the most visible loss of momentum so far, with activity shrinking in China, although European economies are stuck in low gear and many emerging markets are sputtering. Economic growth in China could stay weak in the first half of 2019 given both external and domestic challenges, Citi economists wrote in a Thursday note.



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