China’s National Bureau of Statistics (NBS) has disclosed that the Purchasing Managers’ Index (PMI) for the manufacturing sector contracted for the fourth consecutive month in January. This signals a pressing need for the Chinese government to implement additional economic stimulus measures, even in the wake of measures announced just last week.
According to the NBS report, China’s manufacturing PMI for January registered at 49.2. While this marks an improvement from December 2023’s figure of 49, the index remains below the crucial 50-point threshold, indicative of the manufacturing sector being in a state of contraction.
In contrast, the January PMI for the service sector stood at 50.7, up from 50.4 in December. A reading above 50 signifies expansion in the services sector.
Chinese manufacturing groups continue to grapple with challenging circumstances, driven by weakened demand. Additionally, the real estate sector, a pivotal driver in manufacturing, remains sluggish. Recent data underscores the urgency for the Chinese government to introduce supplementary economic stimulus measures to rejuvenate key sectors.
Despite the persistent challenges, the Chinese economy is projected to expand by 5.2% in 2023, surpassing earlier expectations. The divergence between the struggling manufacturing sector and the overall economic growth indicates the need for targeted interventions to revitalize specific industries facing headwinds. As China navigates economic complexities, attention will be keenly focused on the government’s policy responses to sustain growth and address sector-specific challenges.