Caixin manufacturing PMI down to 51.5 in Jan but still hints expansion
Published: Feb 01, 2021 11:41 AM

PMI File photo:VCG

China's Caixin manufacturing Purchasing Managers Index (PMI) continued to remain in expansion territory of 51.5 in January, but slowed to the lowest level since July 2020. Experts tied the reasons to seasonal factor, sporadic COVID-19 cases in China and weakening overseas demand for Chinese manufacturing. 

The private Caixin manufacturing PMI echoed with the national PMI which stood at 51.3 in January - the 11th consecutive expansion figure but the lowest level since September 2020. 

Both showed that China's manufacturing supply together with its demand are continuing to expand, but the growth slowed. 

"Slower growth is seasonal as China is ready to welcome its most significant festival - the Chinese New Year. Winter also plays a factor which slows manufacturing activities," Liu Xuezhi, a senior macroeconomics expert at the Bank of Communications, told the Global Times on Monday. 

In addition, the recent sporadic COVID-19 cases across China have created an adverse impact for manufacturing, Liu noted, because stricter virus containment measures in some areas will reduce migrant mobility. 

Experts pointed out that the weakening overseas demand also played a role, which could be reflected by the national index of new order for exports (50.2) - the lowest since September 2020. 

"The dropping demand by overseas orders demonstrated that the global economy is recovering slowly. Even if recoveries of other countries are slower than China's, some are reducing dependence on Chinese exports as their manufacturing capacity gradually improves," Liu said. 

Wang Zhe, senior economist with Caixin think tank, agreed the weakening overseas demand dragged down the manufacturing PMI. Wang pointed out that with the increasing uncertainty when it comes to overseas demand, momentum within the domestic economy should be fostered and containment of the COVID-19 will still be pivotal, Caixin reported. 

Global Times