Manufacturing rebounds, but remains in the negative

China's manufacturing activity rebounded moderately in January but remained in the negative territory for the second straight month, official data showed on Thursday.

The official Purchasing Managers' Index, which measures vitality in the manufacturing sector, edged up to 49.5 in January from 49.4 last December, according to the National Bureau of Statistics.

A reading above 50 indicates expansion, while under 50 is considered contraction in manufacturing activity on a monthly basis.

The latest rebound terminated a four-month decline streak since September 2018 amid accelerating expansion among manufacturers, the bureau's senior statistician Zhao Qinghe said.

The sub-index for production climbed to 50.9 from December's 50.8, while new orders shed by 0.1 point to 49.6, the bureau said.

The modest rebound in the manufacturing PMI for January, driven by large enterprises, suggested that the slowdown in China's manufacturing sector is still manageable, ANZ research said in a note released today. However, continuous weakness in the PMIs of medium and small enterprises indicated that the impact of supportive policies taken recently have yet to be seen, it said.

The bureau also released data today showing that the country's non-manufacturing sector was off to a good start in 2019, with non-manufacturing PMI coming in at 54.7 in January, up 0.9 points and 0.3 points, respectively, from December and the average level of 2018.

The services sector, which accounts for more than half of the country's GDP, posted strong expansion, with the sub-index measuring business activity in the industry gaining 1.3 points to 53.6, the highest in seven months.

Robust expansion was seen in sectors including wholesale, rail and aviation transport, postal and courier services, telecommunications, banking and insurance, and tourism, where the readings all stayed at 57 or above, primarily boosted by pre-holiday factors and consumption upgrades, the bureau said.

In contrast, sectors such as securities and real estate development remained in the contracting territory, according to the NBS.