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China factory activity expands for first time in four months

By Frank Prenesti

Date: Tuesday 31 Jan 2023

China factory activity expands for first time in four months

(Sharecast News) - China's economic activity expanded in January after four months of contraction as the economy reopened from strict zero-Covid curbs, according to data published on Tuesday.
The official purchasing managers' index (PMI) for manufacturing, which measures factory activity, jumped to 50.1 in January from 47 in December, according to the National Bureau of Statistics.

It's the first time the gauge has crossed the 50-point mark since September. A reading above 50 indicates expansion, while anything below shows contraction.

There was a bigger-than-expected jump in the non-manufacturing PMI, which came in at 54.4 in January, higher than the consensus of 52.0, and sharply up from the 41.6 reading in December.

"This suggests that the consumption recovery during the Chinese New Year holidays will be a lot stronger than expected. This rebound stems from the economic reopening and the timing is also good as it coincides with the holidays," said economists at ING.

However, National Bureau of Statistics statistician Zhao Qinghe warned there were still "many manufacturing and services firms that reported insufficient market demand in January, which is still the biggest problem faced by firms".

"The economy's recovery foundation needs to be further solidified."

China reversed most of its pandemic restrictions in early December, effectively ending its zero-Covid policy. But the abrupt change in policy caught the public off guard, leading to the rapid spread of infections and causing chaos in factories and consumer markets.

The official PMI survey mainly covers larger businesses and state-owned companies. The Caixin PMI survey, which will be released later this week, focuses on small and medium-sized enterprises.

Reporting by Frank Prenesti for Sharecast.com

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