China’s privately polled manufacturing PMI for January Caixin/S&P Global comes in better than expected at 50.8
- Expected 50.6, before 50.8
The main findings highlighted in the report:
- Production continues to expand modestly, but overall sales growth is declining
- New export business rises for the first time in seven months
- Business confidence improved to its highest level in nine months
Briefly, comment on the report:
- Both supply and demand expanded, with supply exceeding demand.
- The sub-index for total new orders has remained in expansionary territory for six consecutive months
- External demand rose slightly as new export orders expanded for the first time in seven months
- Employment continued to decline.
- Price levels remained weak. Increases in input costs were limited by the slight increase in raw material prices. A measure of input costs reached its lowest level since August. Output prices were weaker, as growing market competition restricted companies’ bargaining power, pushing the gauge back into contraction territory.
Both the jobs and (under)inflation noted in the report are concerns, but they are not surprises. Other data we have for China shows that the country is firmly on a deflationary trend, which is impacting economic growth.
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Yesterday, we got the official PMIs for December, and manufacturing has been in contraction for the ninth of the past 10 months:
The official Purchasing Managers’ Index (PMI) survey covers large and state-owned enterprises, while the Caixin PMI survey covers small and medium-sized enterprises. As a result, the Caixin PMI is considered a more reliable indicator of China’s private sector performance. There’s more about the difference between the two Purchasing Managers’ Indices (PMI) at this link above.