China’s manufacturing sector expanded at the slowest pace in seven months in January amid a slowdown in output and new orders growth, survey results from IHS Markit showed Monday. <\/p>\n
The Caixin manufacturing Purchasing Managers’ Index fell to 51.5 in January from 53.0 in December. A reading above 50 indicates expansion. <\/p>\n
The slowdown in manufacturing is not surprising given that output was already well above trend – capacity utilization rates in industry hit an eight-year high last quarter, Julian Evans-Pritchard and Sheana Yue, economists at Capital Economics, said. Despite the slowdown, activity will remain strong in the near-term. <\/p>\n
“This year, we should pay attention to the effectiveness of domestic epidemic prevention amid the ongoing pandemic, and look at how to bring new momentum to the Chinese economy<\/span> as uncertainties over overseas demand continue,” Wang Zhe, a senior economist at Caixin Insight Group said. <\/p>\n Manufacturers signaled a sustained rise in output in January, to extend the current period of expansion to 11 months. However, the rate of growth was the least marked since last April. <\/p>\n The slowdown coincided with a weaker increase in total new work at the start of the year as there was a renewed drop in export orders, which fell for the first time in six months. Respondents cited the resurgence of the Covid-19 virus globally as the reason for the reduction. <\/p>\n Employment decreased in January, albeit only marginal. Lower staff numbers were generally attributed to company restructuring and the non-replacement of voluntary leavers. <\/p>\n At the same time, manufacturers recorded the slowest accumulation in backlogs of work for eight months. Goods producers recorded a softer expansion of buying activity at the start of the year, with firms generally commented that purchasing rose in line with sales. <\/p>\n Notably, the latest upturn was the weakest since the current period of recovery began last May. At the same time, stocks of purchases fell moderately after a slight increase at the end of 2020. <\/p>\n Stock shortages at suppliers and shipping delays led to a further increase in delivery times for inputs, the survey showed. <\/p>\n Low stock availability and higher raw material prices lifted operating expenses. Moreover, the rate of inflation eased only slightly from December’s three-year high. Manufacturers raised their selling prices at the steepest rate since June 2018.<\/p>\n Although manufacturers in China generally expect output to rise over the next year, the degree of positive sentiment edged down to an eight-month low in January. <\/p>\n