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China's manufacturing purchasing managers' index (PMI) came in at 49.1 on January, down 1 point from December last year, suggesting a contraction in factory activity, data from the National Bureau of Statistics (NBS) showed on Monday.
A PMI reading above 50 indicates expansion, while a reading below 50 reflects contraction.
The index's decline was influenced by factors such as the upcoming Spring Festival holiday and the mass return of employees to their hometowns, according to Zhao Qinghe, a statistician with the NBS.
A worker grinding components in a factory in Hangzhou, Zhejiang Province, China, December 31, 2024. /VCG
Notably, the country's manufacturing activity expectation index rose to 55.3, up two points from the previous month.
This was in a relatively high range and reflects that most manufacturing companies have strong confidence in a post-holiday market development, noted Zhao.
With the resumption of work and production across Chinese regions after the Spring Festival holiday, the advancement of a package of favorable policies alongside the implementation of tasks outlined at the last Central Economic Work Conference, the manufacturing sector is poised to see steady improvement in the first quarter of this year, said Wen Tao, an expert from the China Federation of Logistics and Purchasing (CFLP).
Non-manufacturing sector continues to expand
Meanwhile, the PMI for the non-manufacturing sector remained in the expansion range despite slipping from 52.2 in December to 50.2 in January.
A supermarket filled with people making purchases for the Spring Festival holiday, Dalian, Liaoning Province, China, January 25, 2025. /VCG
The boom in consumption during the New Year holiday has driven the expansion of activities in related sectors such as transportation, catering and retail in January, said Wu Wei, an expert with the CFLP.
Wu added that the recovery of demand in the non-manufacturing sector remained relatively weak. Therefore, Wu said it was crucial to accelerate investment and consumption-related policies, to strengthen the foundation for steady and sustained recovery in the non-manufacturing sector.
Industrial sector expected to rebound
The latest NBS data also show that major Chinese industrial enterprises posted profits of more than 7.4 trillion yuan ($1.02 trillion) in 2024, down 3.3 percent compared to the previous year.
Nevertheless, profits showed a steady recovery in the fourth quarter, said Yu Weining, a statistician from the NBS, noting that the decline narrowed significantly by 12.7 percentage points compared to the third quarter.
Workers processing equipment components at a factory in Qingzhou, Shandong Province, December 31, 2024. /VCG
The timely implementation of a series of incremental policies has driven a sustained recovery in industrial performance, while the profits of large industrial enterprises remained in decline overall in 2024, Yu said.
He added that efforts should be made to expand domestic demand across the board and promote new quality productive forces in the next step, in order to boost continued recovery in industrial performance.