China manufacturing shrinks for sixth month in a row

  • 1 February 2016
  • china manufacturing

Activity in China’s manufacturing sector contracted for the sixth month in a row in January – and hit its lowest level since 2012.

According to the government’s latest factory survey, the Purchasing Managers’ Index (PMI) showed a reading of 49.4 for the month compared to December’s reading of 49.7.

Expectations were for a reading of 49.6 for the month.

A figure below 50 indicates that factory activity contracted.

‘Quite concerning’

Analysts said the numbers confirmed that momentum in Chinese economic activity had continued to weaken into 2016.

“It is quite concerning that the significant monetary and fiscal stimulus in 2015 has only managed to slow the rate of decline in China’s industrial activity,” IG Markets’ Angus Nicholson told the BBC.

China factory workerImage copyrightGetty Images
Image captionChina’s economy grew by 6.9% in 2015, compared with 7.3% a year earlier, marking its slowest growth in a quarter of a century

The first three months of activity is considered the weakest in China due to the seasonal disruption of Chinese New Year, Mr Nicholson explained.

“The big question is how much of this first quarter weakness in China will carry over to the second quarter. It is looking like it will be quite a struggle for China to even hit its lowered growth target of 6.5% for 2016.”

China’s economy grew by 6.9% in 2015, compared with 7.3% a year earlier, marking its slowest growth in a quarter of a century. Beijing had set an official growth target for the year of “about 7%”.

China’s slowing growth is a major concern for investors around the world, as the country has been a key driver of the global economy.

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