China’s January Flash PMI shows factory output gaining momentum

Nathan Andrada – Fourth Estate Cooperative Contributor

Shanghai, China (4E) – A preliminary reading from a private survey shows that China’s factory sector grew in January to its highest level in two years, as increasing domestic and foreign orders signal that the world’s second-largest economy is on a rebound.

The January Flash Purchasing Managers Index (PMI) from HSBC jumped to 51.9 from the previous month’s 51.4 reading. The latest data comes just days after China announced its gross domestic product (GDP) expanded by 7.9 per cent in the fourth quarter last year.

The PMI offers an early preview of China’s economy for the rest of the year, and the figure is just one of the indicators that it is bouncing back from almost two years of continued slide.

Qu Hongbin, HSBC’s chief economist for the China market, said on Thursday the rise of manufacturing activity in January is a result of the gains built in the last five months.

Qu added that even with modest demand overseas, China is still expected continue its recovery in the coming months due to the restocking process by manufacturers as domestic demand picks up.

This month, the sub-indices employment, output and new orders — accounting for three-quarters of the flash PMI — all edged higher and stood above the 50 level indicating expansion, according to HSBC.

The flash index also showed that demand for Chinese exports slightly increased in January, although it did not indicate whether the uptrend can be sustained.

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