China's January Manufacturing PMI at 50.1... Rebounds After 4 Months (Comprehensive)

[Asia Economy Beijing=Special Correspondent Kim Hyunjung] China's manufacturing business indicators rebounded for the first time in four months, recovering the expansion phase. After abandoning the zero-COVID policy, the country experienced social and economic turmoil for a while, but it appears to be stabilizing this month.

On the 31st, China's National Bureau of Statistics announced that the January Manufacturing Purchasing Managers' Index (PMI) recorded 50.1. This figure surpasses both the previous month's figure (47.0) and experts' forecast (49.8). It also marks a rebound after a continuous decline since peaking at 50.1 in September last year, recovering for the first time in four months.

The manufacturing PMI is compiled by surveying purchasing managers from over 700 manufacturing companies nationwide on five sub-indices: new orders, production, shipments, inventory, and employment. A reading above the baseline of 50 indicates an expansion phase, while below 50 indicates a contraction phase. The announcement exceeding the baseline and recovering the expansion phase is also the first time in four months since September last year.

The production index, a sub-index of the manufacturing PMI, was 49.8, and the new orders index was 50.9, rising 5.2 and 7.0 points respectively compared to the previous month. By industry, nine sectors including agriculture, food processing, pharmaceuticals, general equipment, railways, shipbuilding, and aerospace equipment showed expansion in both production and new orders indices. In particular, the pharmaceutical sector showed both production and demand indices above 65.0.

By company size, differences in the rebound scale were confirmed between large enterprises and small and medium-sized enterprises (SMEs). The large enterprise PMI recorded 52.3, improving 4.0 points from the previous month, recovering the expansion phase. Medium-sized and small enterprises rose 2.2 and 2.5 points respectively from the previous month, recording 48.6 and 47.2, remaining in the contraction phase.

During the same period, the service sector (non-manufacturing) PMI showed a strong rebound at 54.4 compared to the previous month's 41.6. Experts had forecasted 52.0. The employment index improved by 2.9 points from the previous month to 47.7.