Workers produce garments for export to overseas markets at Sihong Guoshun Garment Co., Ltd. in Weiying town, Sihong County, Suqian city, East China’s Jiangsu province, on January 23, 2025..
Costfoto | Nurphoto | Getty Images
China’s factory activity in January unexpectedly contracted, reversing the expansionary momentum in the past three months, partly due to a slow season ahead of the Lunar New year.
The official purchasing managers’ index for January came in at 49.1, data released by the National Bureau of Statistics on Monday showed.
The reading fell short of Reuters poll estimates of 50.1. PMI in December came in at 50.1, while in November it was 50.3. A PMI reading above the 50 threshold indicates expansion in activity, while one below that denotes contraction.
The manufacturing PMI in January tends to be softer, as migrant workers return to hometowns ahead of the Chinese New Year, which falls on Jan. 29, said Hui Shan, chief China economist at Goldman Sachs.
China’s non-manufacturing PMI, which measures services and construction activity, fell to 50.2 in January, compared to 52.2 in the preceding month.
Separately, China’s industrial profits jumped 11% in December from a year earlier, growing for the first time since July.
Corporate profits have been recovering from a sharp 27% year-on-year plunge in September — their steepest drop since March 2020 during the Covid-19 pandemic. They had dropped 7.3% on year in November and 10% in October, as a slump in the real estate sector and bleak income prospects continued to weigh on consumer demand.
Industrial profits are a key indicator of the financial health of factories, utilities and mines in China.
The full-year industrial profits in 2024 fell 3.3% from the previous year, extending declines to a third consecutive year.
The world’s second-largest economy met official annual growth target last year, expanding 5.0%, as a barrage of stimulus measures kicked in. Economists had pointed to the industrial output growth outpacing retail sales, underscoring the country’s supply-side strength while domestic demand remained weak.
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