China's Jan Caixin PMI misses expectations, output and new orders slow down

China's Jan 207 Caixin manufacturing PMI came at 51.0 vs 51.8 expected and 51.9 last, as output and new orders increased at weaker rates.

Summary

Latest data signalled a further improvement in the health of China’s manufacturing sector at the start of 2017. However, the rate of improvement slowed since December, as output and new orders increased at weaker rates amid a further reduction in employment. In contrast, new export work rose at the fastest pace since September 2014. At the same time, inflationary pressures remained sharp, with both input costs and output charges increasing at rates scarcely seen throughout the past five years. Nonetheless, companies remained optimistic towards future growth prospects, and expressed the highest degree of optimism towards the 12-month business outlook since July 2016. 

Commenting on the China General Manufacturing PMI™ data, Dr. Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group said: “The Caixin China General Manufacturing PMI was 51.0 in January,  down 0.9 points from the previous month and lower than the
average level in the fourth quarter last year. The sub-indices for output and new orders both weakened sharply from those in the preceding month, while stocks of purchases and finished goods both slid into contraction territory."

Dr. Zhong added: "Manufacturers appear to have become rather reluctant to restock. Input prices and output charges continued to rise rapidly, but at slower rates than in the previous month.  The Chinese economy maintained stable growth in January. But the sub-indices showed that the current growth momentum may be hard to sustain. We must remain wary of downward pressures on the economy this year.”