January factory growth dips as property market slows

Growth in China’s manufacturing sector slowed more than expected in January to an eight-month low in the face of a cooling property market and tighter pollution rules that have curtailed factory output.

The data, which gives global investors their first look at business conditions in China at the start of 2018, reinforced the view that the economy is beginning to gradually lose steam after growing by a better-than-expected 6.9 percent last year.

The official Purchasing Managers’ Index (PMI) released on Wednesday edged lower to 51.3 in January, compared with 51.6 in December. But it remained comfortably above the 50-point mark that separates growth from contraction on a monthly basis.

Analysts surveyed by Reuters had forecast the headline number would ease slightly to 51.5.

Indexes for output, total new orders and imports all showed more moderate expansion in January compared with last month, while export orders fell marginally. The new export order index dropped to 49.5, 2.4 percentage points lower than December’s reading.

However, the overall factory reading still appeared relatively solid, marking the 19th straight month of expansion and reinforcing expectations that any slowdown in the economy would be gradual. Economists polled by Reuters are penciling in growth of 6.5 percent for this year.

A separate PMI for the steel sector rose to 50.9 in January from 50.2 in December.

In another sign of broader economic resilience, a sister survey showed activity in China’s services sector accelerated to a four-month high in January.

The official non-manufacturing PMI rose to 55.3 from 55 in December.