China manufacturing activity hit by Covid, holiday lull

Activity in China's manufacturing sector slowed further in January as new Covid-19 outbreaks accentuated a typical seasonal lull, the latest purchasing managers' index (PMI) data show.

The official PMI for the manufacturing sector was 51.3 in January, down by 0.6 points from 51.9 in December. This was the second consecutive slowdown and the weakest reading for five months, but the 11th consecutive month in which the PMI has been above the level of 50 that indicates an expansion in the sector, data from the national statistics bureau (NBS) show.

Manufacturing activity usually slows before and after China's lunar new year, which runs from 11-17 February this year. But strict quarantine policies applied to provinces such as Hebei, Jilin and Heilongjiang that have been hit by small Covid-19 outbreaks also had an impact on manufacturing operations in January, the NBS said.

The sub-indexes for production and new orders fell by 0.7 and 1.3 points respectively in January, while the sub-indexes for employee and supplier delivery times dropped by 1.2 and 1.1. Some manufacturers surveyed by the NBS said employees and logistics were affected by quarantine policies, with some workers heading back to their hometowns earlier than usual for the lunar new year.

The index for new export orders fell by 1.1 points to 50.2 in December, also a five-month low.

The private-sector Caixin/Markit manufacturing PMI hit a seven-month low at 51.5 in January, down from 53 in December. The sub-indexes for production and new orders dipped to nine- and seven-month lows respectively. Caixin surveys fewer, mainly smaller and medium-size companies for its PMI compared to official index.