Output growth in China hits 13-month high in January
Staff Writer |
China’s manufacturing sector continued to expand at the start of 2018, with production rising to the greatest extent in just over a year.
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Growth was supported by further, albeit slightly softer, increases in total new work and new export sales.[break]
Higher production requirements led firms to increase their buying activity, while employment fell at the weakest pace for nearly three years.
Capacity pressures meanwhile persisted, with backlogs of work rising to the greatest extent since early-2011.
Prices data showed that input cost inflation eased to a fivemonth low and factory gate charges rose only slightly.
Looking ahead, companies were generally optimistic that output would rise over the next year.
Moreover, the degree of confidence strengthened to a four-month high.
The seasonally adjusted Purchasing Managers’ Index (PMI) – a composite indicator designed to provide a single-figure snapshot of operating conditions in the manufacturing economy – was unchanged from December’s reading of 51.5 in January, to signal a further modest improvement in overall operating conditions.
The health of the sector has now strengthened in each of the past eight months, while the pace of improvement was slightly stronger than the long-run trend.
January data signalled a solid and accelerated increase in Chinese manufacturing output, with the rate of growth the strongest since December 2016.
A number of companies mentioned that improving demand conditions and rising new work led them to raise output.
Notably, total new orders rose for the nineteenth month in a row, albeit at a moderate pace that was weaker than in December.
Growth in new export sales also softened to a similarly modest pace.
Employment continued to decline in January, which was partly linked to company downsizing policies.
That said, the rate of job shedding was the weakest since February 2015.
At the same time, rising new order volumes exerted further pressure on operating capacity.
Notably, outstanding business increased at a solid pace that was the quickest since March 2011.
In line with higher output, manufacturing companies in China continued to raise their purchasing activity in January.
However, the time taken for purchased items to be delivered continued to increase.
Stocks of finished goods declined slightly as firms made greater use of current inventories to fulfil new and existing orders.
Stocks of purchases were meanwhile unchanged after a slight drop in December.
The rate of input price inflation softened to a five-month low in January, but remained sharp overall.
Companies commonly linked higher costs to greater prices for raw materials such as metals and packaging.
At the same time, output charges rose at the weakest pace since June 2017.
Business optimism about the year ahead strengthened to a four-month record in January.
Positive expectations were support by forecasts of improving market conditions, promotional activities and new product launches. ■