China: It’s not spring yet – Standard Chartered

Analysts at Standard Chartered point out that China’s official manufacturing PMI inched up to 49.5 in January from 49.4 in December, remaining below 50 for the second month.

Key Quotes

“Production activity remained stable, with the production sub-index improving marginally by 0.1ppt to 50.9. The new orders PMI stayed below 50, at 47.6, suggesting still-sluggish demand. Meanwhile, the non-manufacturing PMI edged up 0.9ppt to 54.7 in January, reaching a four-month high. Services PMI rose to 53.6, supported by robust wholesale, transportation and travelling business activity during the holiday season. Construction activity turned weaker due to weather and holiday effects.”

“Trade-related PMIs improved in January, but remained in contractionary territory. We expect exports to have fallen further on the impact of tariffs and softer global demand. Import growth likely recovered to 1.5% y/y from -7.6% y/y in December on lower tariffs, resumption of soybean imports from the US, and higher commodity prices. FX reserves may have increased to USD 3.08tn in January on FX valuation effects. We expect both CPI and PPI inflation to have eased further.”