China’s factory activity contracts in January, breaking 3-month expansion

SCMP | Jan. 26, 2025, 8:36 p.m. | Original

China has reported its purchasing managers’ index for January, a major gauge of industrial activity. Photo: AFP

China’s factory activity fell back into contractionary territory in January in advance of an early Lunar New Year holiday period, a drop-off following a rush of purchase orders issued in the run-up to the inauguration of US President Donald Trump and a likely escalation of tariffs on Chinese goods.

The official manufacturing purchasing managers’ index (PMI) – an indicator of factory sentiment – fell to 49.1 in January, compared to 50.1 a month earlier, according to data released by the National Bureau of Statistics (NBS) on Monday.

A PMI reading above 50 indicates expansion in the manufacturing sector, while a reading below 50 signals contraction.

Zhao Qinghe, a senior statistician at the NBS, attributed the performance to the approaching Lunar New Year holiday , with workers heading home early for the festivities.

Most businesses are optimistic about their prospects after the holiday, Zhao added, with the activity expectation subindex for the manufacturing and non-manufacturing sectors at an expansionary 55.3 and 56.7, respectively.

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