SINGAPORE—A survey of factory managers in China released Wednesday shows manufacturing contracted in January for a fourth straight month, reflecting weak demand and a faltering recovery in the world’s second-largest economy.
The official purchasing managers index, or PMI, rose slightly to 49.2 in January from 49.0 the month before. The PMI is on a scale up to 100 where 50 marks the cutoff between expansion and contraction.
The manufacturing PMI has fallen in nine of the past ten months, rising only in September.
“Overall, the PMI data show that China’s economy remains relatively soft, as confidence remains weak,” Lynn Song of ING Economics said in a report. “Until forward-looking indicators such as new orders return to expansion, economic momentum is likely to remain tepid.”
Last week, the central bank cut its reserve ratio requirement for banks, allowing banks to increase the amount of capital they can lend.
Beijing is also looking to expand some loans to real estate developers amid an ongoing property crisis, as developers struggle with a cash crunch after a crackdown on excessive borrowing.
Global demand for manufactured goods has suffered as central banks around the world have raised interest rates to battle decades-high rates of inflation. Price pressures have eased in recent months, but demand has yet to rebound to pre-pandemic levels. That has ramifications across the region since supply chains linked to China are scattered across many Asian countries.
Apart from industrial activity, China’s non-manufacturing PMI rose to 50.7, the statistics bureau reported. The service sector PMI sub-index was 50.1, up from December’s 49.3.
