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Investing.com-- Chinese manufacturing activity unexpectedly shrank in January, purchasing managers index data showed on Monday, as local businesses took only fleeting support from recent stimulus measures from Beijing.
Growth in non-manufacturing activity also slowed sharply in January, as the outlook for local businesses was clouded by the prospect of increased U.S. trade tariffs.
Manufacturing PMI fell to 49.1 in January, compared to expectations that it would remain steady at the 50.1 seen in December. A reading below 50 indicates contraction in the sector, with manufacturing PMI now falling back into contraction after three months of growth.
Non-manufacturing PMI slid to 50.2, much lower than December’s reading of 52.2. This brought China's composite PMI to 50.1, much lower than expectations of 52.1 and December's reading of 52.2.
Monday’s PMI data indicates that Chinese businesses took limited support from a swathe of aggressive stimulus measures launched by Beijing through late-2024, highlighting the need for more support from the government.
The data comes just before the Lunar New Year holiday, which will see Chinese markets closed for a week. The holiday usually boosts local business activity, especially in the non-manufacturing sector, amid increased holiday travel and spending.
Monday’s data also comes amid heightened concerns over increased U.S. trade tariffs against China. U.S. President Donald Trump warned he could impose 10% tariffs on all Chinese imports by February 1.
China is expected to dole out even more supportive measures to offset the impact of Trump’s planned tariffs.