China’s manufacturing activity contracted for a second consecutive month in January, official data showed Thursday, another sign of the country’s economic slowdown.
The Purchasing Managers’ Index (PMI), a gauge of factory conditions, came in at 49.5 for the month, up slightly from 49.4 in December, according to the National Bureau of Statistics (NBS).
Although this marks the first uptick in four months, it remained below the 50.0 mark separating expansion from contraction.
‘The expansion of production in the manufacturing sector stepped up slightly,’ NBS analyst Zhao Qinghe said in a statement.
Nie Wen, an economist at Huabao Trust in Shanghai, told Bloomberg that January activity was lifted by the front-loading of production before China’s Lunar New Year holiday next week and a ‘relatively big issuance of municipal bonds and corporate bonds, both of which helped maintain demand’.
But, Nie warned, ‘the rebound will be a short-lived one’.
Many businesses close for the Chinese New Year, with workers heading home to celebrate the week-long holiday.
‘While the official manufacturing PMI didn’t weaken any further in January, it still suggests that the economy lost momentum at the start of the year,’ Marcel Thieliant, senior economist at Capital Economics, wrote in a reasearch note.
China reported its slowest economy growth in almost three decades in 2018, losing more steam in the last quarter as it battles a massive debt pile and a US trade war.