China's manufacturing activity unexpectedly contracted in January, while industrial profits showed a positive rebound in December. The official PMI for January came in at 49.1, below the 50 threshold indicating contraction, reversing the expansionary trend seen in the previous three months. However, industrial profits surged 11% in December compared to the previous year, marking the first increase since July.
China's factory activity unexpectedly contracted in January, reversing the expansionary momentum seen in the past three months. The official purchasing managers' index ( PMI ) for January came in at 49.1, according to data released by the National Bureau of Statistics on Monday. This reading fell short of the Reuters poll estimate of 50.1 and marked a shift from December's 50.1 PMI reading and November's 50.3 reading.
A PMI reading above 50 indicates expansion in activity, while one below 50 denotes contraction. Hui Shan, chief China economist at Goldman Sachs, attributed the softer January manufacturing PMI to the traditional slowdown as migrant workers return to their hometowns ahead of the Chinese New Year, which falls on January 29.Despite the contraction in manufacturing, China's industrial profits saw a positive rebound in December, jumping 11% from a year earlier. This marked the first increase in industrial profits since July. However, full-year industrial profits in 2024 still declined by 3.3% from the previous year, extending a downward trend for three consecutive years. The rebound in December profits followed a sharp 27% year-on-year plunge in September, the steepest drop since March 2020 during the Covid-19 pandemic. Profits had also declined by 7.3% on year in November and 10% in October, as a slump in the real estate sector and muted income prospects continued to dampen consumer demand. Industrial profits are a crucial indicator of the financial health of factories, utilities, and mines in China
CHINA ECONOMY FACTORY ACTIVITY PMI INDUSTRIAL PROFITS
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