China January factory growth remains strong

BEIJING: China’s manufacturing sector sustained growth at multi-month highs in January, a private business survey showed on Thursday, as factories continued to raise output to meet new orders, suggesting resilience in the world’s second largest economy.

The Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) was at 51.5 in January, unchanged from the previous month.

Analysts surveyed by Reuters had forecast a drop to 51.3.

December’s reading was the highest in four months and above the 50-point mark that separates growth from contraction.

Growth in factory output quickened to a 13-month high in January, and employment fell at its slowest pace in nearly three years.

The solid Caixin PMI readings could help reassure international investors that China’s economy is still expanding at a healthy clip as it nurtures new drivers of growth.

The Chinese economy slowed slightly in the second half of last year from the first half amid a government crackdown on air pollution, a cooling property market and higher borrowing costs.

Analysts expect some softening in economic expansion early this year after a forecast-beating 6.9% growth in 2017, the first annual acceleration in seven years.

An official survey released on Wednesday on manufacturing activity in January pointed to a slight loss of momentum.

“The downward pressure on the economy in the first quarter could be slightly bigger than the fourth quarter (last year),” said Wang Jun, chief economist at Zhongyuan Bank in Beijing. “We expect first-quarter GDP growth to be around 6.7%.”

Analysts say the divergence between the official and Caixin findings is mostly due to margins of error in the survey resulting from different sample sizes and calculation methods.

The Caixin survey also tends to focus on small and mid-sized firms, which are believed to be more export-oriented.