China’s factory prospects are easing again, services are slowing

An official indicator of China’s output fell for a second month in January, while service activity slowed to its lowest level since March.

The official index of production procurement managers fell to 51.3 from 51.9 in December, according to data released Sunday by the National Bureau of Statistics.
The non-productive gap fell to 52.4 from 55.7 in January. This was the biggest drop since February last year, when China blocked to contain Covid-19. Readings above 50 indicate the expansion of production from the previous month.

Growth slowed in January, with services falling the most

Source: National Bureau of Statistics

China’s recovery from the pandemic increased at the end of 2020, fueled by a boom in exports of medical and electronic products.
Economists expected a certain weakness of the PMI before the celebration of the Lunar New Year in February. In addition to the seasonal decline in production, strict travel restrictions and virus control measures following the recent Covid-19 outbreaks in China means many workers will not make the annual trip back home, which is likely to lead to lower gift spending. and tables.
“These measures will affect the recovery in the services sector, especially in the hotel industry,” economists at Nomura Holdings Inc., led by Lu Ting, wrote in a report before the data was released. However, “it could give a small boost to industrial production and construction in South China, as workers would remain in the workplace.”
In general, the new control measures will affect economic growth in the first quarter, they wrote.

A subindex of new export orders for factories fell to 50.2, while one for new orders was lower to 52.3
A sub-index of employment fell to 48.4, while employment slowed to 47.8

– With the assistance of James Mayger and Lin Zhu

(Diagram updates, economists comment on even more details throughout.)