China Manufacturing Growth Weakens In January

(RTTNews) - China's manufacturing sector expanded at a slower pace in January as staffing declined the most since 2020 and exports orders fell for the second consecutive month amid international policies posing significant challenges for the economy.

The Caixin Purchasing Managers' Index fell to 50.1 in January from 50.5 in December, survey results from S&P Global showed on Monday. However, the reading above 50.0 indicates expansion in the sector.

Production growth accelerated in January, in line with the trend for new orders. Higher new business driven by better underlying demand and increased promotional efforts supported the growth in output. However, new export orders decreased for the second straight month.

Sentiment improved among manufacturers on the back of better demand and hopes for further growth.

Meanwhile, employment declined at the fastest pace since February 2020 as concerns regarding expectations for growth affected hiring decisions.

Purchasing activity continued to grow in response to higher work inflows. Firms ramped up their stocks of purchases and their post-production inventories accumulated indicating interest to retain additional inventory as buffer stocks.

Finally, average input prices stabilized with instances of suppliers offering discounts offsetting rising raw material costs. Manufactures lowered their selling prices to support sales, leading to a second monthly fall in average charges at the quickest pace for one-and-a-half years.

The policies introduced since September 2024 have delivered tangible results, enabling China to achieve its economic growth target for the year, Caixin Insight Group Senior Economist Wang Zhe said.

However, Zhe said the effectiveness of stimulus measures, such as large-scale equipment upgrades and trade-in programs for consumer goods, may diminish this year.

Rising uncertainties in international policies could worsen export environment and pose significant challenges for the economy, the economist added.