Chinese Manufacturing Activity Declines in January

Investing.com reports that Chinese manufacturing activity unexpectedly shrank in January, based on purchasing managers index (PMI) data released on Monday. This decline occurred despite some brief support from recent stimulus measures in Beijing.

Manufacturing PMI Details

The Manufacturing PMI fell to 49.1 in January, contrasting with expectations for it to remain steady at 50.1 from December. A PMI reading below 50 indicates contraction, marking a return to contraction after three months of growth.

Non-Manufacturing Activity

Similarly, non-manufacturing PMI decreased significantly to 50.2, down from 52.2 in December. Consequently, China’s composite PMI dropped to 50.1, much lower than the anticipated 52.1 and December’s 52.2.

Implications of the Data

Monday’s PMI figures suggest that Chinese businesses received limited benefit from aggressive stimulus measures implemented by the government through late 2024, demonstrating a need for further support.

This report arrives just before the Lunar New Year holiday, during which Chinese markets will be closed for a week. Typically, this holiday boosts local business activity, especially in the non-manufacturing sector, due to increased travel and spending.

Impact of U.S. Trade Tariffs

The release of this data coincides with growing concerns over potential U.S. trade tariffs on China, with President Donald Trump threatening to impose 10% tariffs on all Chinese imports by February 1. To mitigate the effects of these planned tariffs, it is anticipated that China will introduce additional supportive measures.