Manufacturing slowed in China this month for the first time in four months as workers began leaving assembly lines to travel to their hometowns for the Lunar New Year holiday.
The Chinese National Bureau of Statistics said its purchasing managers index (PMI), based on a survey of factory managers, slipped to 49.1 this month from 50.1 the month before.
A PMI reading above 50 indicates expansion, while under 50 signals a contraction in activity.
Photo: AFP
New orders and production also contracted.
A parallel PMI for the non-manufacturing sector, which covers construction and services, fell to 50.2 from 52.2 last month.
The slide in factory activity was partly due to the approach of the holiday, bureau senior statistician Zhao Qinghe (趙清河) said.
The Lunar New Year holiday, China’s most important festival, begins today and runs until Tuesday next week.
Millions of Chinese leave the cities to travel back home for a rare break with family during the holidays, which tend to distort economic data early in the year.
China’s economy grew at a 5 percent annual pace last year, hitting the government’s target thanks to strong exports and stimulus measures.
While activity slowed this month, it is likely to pick up again thanks to the government’s efforts, Capital Economics Ltd economist Huang Zichun (黃子春) said in a commentary.
However, “the disappointing PMI data underscores the difficulty policymakers face in achieving a sustained recovery in growth,” she said.
She noted that the PMI for construction also fell.
“This is disappointing, and suggests that fiscal support may be struggling to offset the broader pressures weighing on construction activity,” Huang said.
The outlook for exports also remains uncertain, given threats by US President Donald Trump to raise tariffs on imports from China.
Separately, China announced new measures to promote the development of index investment products, its latest effort to shore up the ailing equity market as it embraces a turbulent external economic environment.
The government aims to achieve a significant increase in the scale and proportion of index investment in the capital market through efforts over a period of time, the China Securities Regulatory Commission said in a statement posted on its Web site on Sunday.
The commission would also try to attract foreign funds to invest in the yuan-denominated A-share market via exchange-traded funds (ETFs) and promote the development of equity and bond ETFs, it said.
It would also try to reduce index funds’ costs and exempt market-making fees, it added.
Additional reporting by Bloomberg
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