China's manufacturers continue modest rise in overall operating conditions

China’s manufacturing sector sustained growth as production accelerated in January, according to a private survey released by Caixin yesterday.

The Caixin General China Manufacturing Purchasing Managers’ Index, an indicator of manufacturing activity, was 51.5 in January, flat from December last year, the survey done by financial information service provider Markit and sponsored by Caixin Media Co showed.

The PMI — a reading above 50 signals growth while one below 50 means contraction — is a composite indicator that provides a snapshot of operating conditions in the manufacturing sector.

“The Caixin PMI suggested that operating conditions continued to improve at a modest pace in January. The manufacturing industry had a good start to 2018. Going forward, we should keep a close eye on the stability of the demand side,” said Zhong Zhengsheng, director of macroeconomic analysis at CEBM Group, a subsidiary of Caixin Insight Group.

The manufacturing sector was supported by strong production in January.

Chinese manufacturing output accelerated in January to notch the strongest growth rate since December 2016. Improving demand conditions and rising new orders led companies to raise their output at the start of this year.

“The sub-indices of output and employment continued to rise, reflecting improving production conditions,” Zhong said.

The higher output spurred manufacturers in China to raise their purchasing activity last month, Caixin said.

Total new orders increased for the 19th consecutive month, but at a moderate pace that was weaker than in December last year. 

The Caixin PMI data are in contrast with the official manufacturing PMI reading of 51.3 in January, which was the slowest growth in eight months.

The official PMI samples 3,000 manufacturing enterprises in China. 

The Caixin PMI covers about 500 manufacturers and is relatively volatile due to its small sample size and the dominance of small and private firms.