Industry PMI Photo:VCG

China's private Caixin Manufacturing Purchasing Managers' Index (PMI) edged up to 49.2 in January from the previous month's reading of 49. Though it has remained in contraction territory for six consecutive months, businesses have become more optimistic, a survey revealed.

The Caixin PMI tracks small and private-sector manufacturers in China. According to the survey, China's recent adjustment of COVID-19 response significantly eased pressure on the manufacturing in January. 

Output fell at the softest pace in five months, while the downturn in new orders moderated, the survey found. 

Wang Zhe, a senior economist at Caixin Insight Group, said that both manufacturing supply and demand continued to shrink in January impacted by COVID-19 infections. Output shrank for the fifth straight month while total new orders shrank for the sixth straight month, but the contraction was milder than in December.

"Due to mounting recession risks overseas, external demand was weak, with the reading for new export orders contracting for the sixth consecutive month," Wang said.

Though the figure remained under the 50-mark that separates expansion from contraction, "when considering the 12-month outlook for output, firms expressed the strongest optimism since May 2021, supported by hopes that economic conditions and new business will rebound," the survey said.

Supply chains moved closer to stabilization at the start of 2023, with average lead times for inputs increasing only slightly. While the survey noted that pressure had receded, "logistics had yet to recover fully in some areas amid worker shortages."

Overall, the pandemic continued to take a toll on the economy in January, Wang said, but optimism continued to improve as businesses look toward a post-COVID economic revival. "After being hit by the latest wave of infections, the focus of economic work should be on accelerating economic recovery and promoting normalized production and social order," Wang said.

The Caixin PMI trend is generally in line with the official PMI data released on Tuesday. The official manufacturing PMI came in at 50.1 in January, up from 47 in December, bouncing back into expansion territory.

Global Times