China’s non-manufacturing activity grows further

Business activity in China’s non-manufacturing sector continued to grow in January, partly as a result of robust retail trade ahead of the Spring Festival, an official monthly survey showed on Sunday.

The Purchasing Managers Index (PMI) of the non-manufacturing sector came in at 56.2 percent in January, up 0.1 percentage points from December, the China Federation of Logistics and Purchasing (CFLP) said in an online statement.

This marked the index’s fourth straight month of rises. A reading above 50 percent indicates expansion, while a reading below 50 percent indicates contraction.

The CFLP said the statistics showed China’s non-manufacturing sector is further firming up.

The sub-index for new orders retreated 0.6 percentage point from a month earlier to a still-high 53.7 percent, while that for new export orders saw a slight climb of 0.1 percentage points to 52.6 percent.

Retail businesses were most active in the month, with the activity index rising 4.5 percentage points to 71.1 percent, helped by the annual buying spree ahead of the Spring Festival.

The sub-index of intermediate input prices logged the biggest gain of 4.4 percentage points to hit 58.2 percent, its highest level in nearly 10 months.

The holiday effect, as well as price rises in construction-related upstream materials, are the reasons behind the sharp increase, the CFLP said.

Chinese authorities last year introduced a string of pro-growth measures, including approving massive construction projects, to stimulate the slowing economy.

The sub-index for new orders in the construction industry reached 56.7 percent in January, suggesting infrastructure investment will continue to grow, which created conditions for upstream companies to raise prices, according to the statement.

Given the fast rise of prices, Cai Jin, vice chairman of the CFLP, warned of possible cost-driven inflationary pressures in the statement.

In January, business activity in the catering industry saw a sharp drop of 17.3 percentage points from a month earlier, while the new orders index shrank to below 50 percent.

The statement attributed the change to a public response to the central government’s calls for a frugal lifestyle, which has led some government organs to reduce extravagance and cut spending in restaurants.

Other sub-indices, such as in-hand orders, employment and business outlook declined from a month earlier, the statement added.

The figures followed Friday’s release of the manufacturing sector’s PMI, which put the index at 50.4 percent, a sign of steady growth in China’s economy.

The CFLP’s non-manufacturing PMI is based on a survey of about 1,200 companies in 27 industries, including transportation, real estate, catering and software development.


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