Chinese Factories Have Worst Result Since 2016, Caixin PMI Shows

(Bloomberg) -- A survey of purchasing managers at Chinese factories had the worst result since 2016 in January, in the latest indication that China’s economic slowdown still has a way to go.

  • The index fell to 48.3 from 49.7 in December, the lowest reading since February 2016 and below the forecast of 49.6, according to Caixin Media and IHS Markit, who compile the data.
Chinese Factories Have Worst Result Since 2016, Caixin PMI Shows

Key Insights

  • Result was worse than the official PMI released on Thursday, which showed the manufacturing contraction easing from December
  • Compared to the government’s survey, Markit’s survey is weighted toward smaller and private companies, which have been struggling due to the slowdown, a crackdown on credit and debt, and the trade war
  • Output fell to 48.1 from 50.3 in December, and new orders dipped further into contractionary territory to the lowest reading since September 2015, pointing to a moderate contraction in demand across the manufacturing sector, according to a statement from Markit
  • However, business confidence was at an eight-month high, and the gauge for new export orders rose above the 50 level -- the line separating contraction from expansion -- “showing that companies’ export orders have obviously rebounded since the truce in the China-U.S. trade war,” according to a statement from Zhong Zhengsheng, director of macroeconomic analysis at CEBM Group, released with the Markit report

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