China manufacturing activity slightly grows in January

The Caixin China General Manufacturing PMI stood at 50.1 in January 2025, slightly below market consensus and a decrease from December’s 50.5, marking the fourth consecutive month of expansion in factory activity.

China manufacturing activity slightly grows in January

However, the January reading reflected the slowest growth in this period, as foreign orders contracted for the second straight month due to mounting challenges related to global trade policies. Despite this, the data showed that factory output continued to rise, extending its streak to 15 months, with the pace of growth accelerating in tandem with the trend in new orders.

Employment conditions worsen

Employment conditions worsened, as the number of workers employed in the manufacturing sector fell at the steepest rate since February 2024. This decline contributed to the fourth consecutive monthly rise in backlogged work, signaling continued strain on production capacity. However, on a more positive note, buying activity increased as delivery times improved, enabling firms to build up stocks of purchases for the sixth consecutive month. On the price front, input prices remained stable as supplier discounts helped offset the rising costs of raw materials. Nonetheless, selling prices saw a notable decline, dropping at the fastest pace since July 2023.

Business sentiment improve

Despite the mixed performance of manufacturing activity, sentiment among businesses showed improvement. According to Dr. Wang Zhe, senior economist at Caixin Insight Group, "The policies introduced since September 2024 have delivered tangible results." This suggests that recent policy measures may be beginning to have a positive impact, offering some optimism for the future outlook. Nonetheless, the ongoing challenges in global trade and a slowdown in foreign demand continue to weigh on the sector, leaving room for cautious optimism as the year progresses.