Manufacturers face milder pressure

Manufacturers in China have been facing milder pressure since last month as market supply and demand capacity showed signs of stabilisation upon optimised Covid-19 containment, a private survey says.

Nevertheless, as manufacturing activity has shrunk for six straight months, there is a need to step up policy support for domestic demand and smaller businesses, experts said.

The Caixin China General Manufacturing Purchasing Managers’ Index (PMI) – which gauges operating conditions in the sector – rose from 49 in December to 49.2 in January, indicating a mitigation of the downward pressures on manufacturing activity, media group Caixin said in a report on Wednesday.

With optimised Covid-19 measures, output of the manufacturing sector fell at the softest pace in five months, the downturn in new orders moderated, while the strain on supply chains eased, the report said.

Referring to the 12-month outlook for output, manufacturers polled by Caixin expressed the strongest optimism since April 2021, supported by hopes that economic conditions will improve and new market orders will rebound.

Despite the improvements, the Caixin PMI, which is still below the 50 mark that separates expansion from contraction for the sixth month in a row, indicates that the contraction in manufacturing activity has continued.

A rise in Covid infections nationwide shrunk the number of people at work, keeping the subindex of employment in contraction territory for the 10th month running.

External demand remained weak due to mounting recession risks overseas, as the reading for new export orders contracted for the sixth consecutive month, the Caixin report stated.

“Overall, the pandemic continued to take a toll on the economy in January,” said Wang Zhe, senior economist at Caixin Insight Group.

After being hit by recent Covid infections, the primary focus of economic work should be on accelerating economic recovery and promoting normalised production and social order, Wang said.