Chinas manufacturing growth weakened in January, according to two surveys, suggesting its rebound from the coronavirus pandemic is leveling off.
"Demand expanded, with the new orders index growing at a strong level, supported by the new export orders index expanding, customers" inventories index remaining in "too low' territory and at a level considered a positive for future production, and the backlog of orders index remaining at high levels".
Takeshi Okuwaki, an economist at Dai-ichi Life Research Institute in Tokyo, said Japanese manufacturers may slash output as the state of emergency will unavoidably hurt the economy. This reading fell short of analysts' estimate of 60. The PMI has averaged 53.1 percent the past 12 months.
The purchasing managers' index (PMI) for China's non-manufacturing sector came in at 52.4 in January, down from 55.7 in December, the National Bureau of Statistics (NBS) said Sunday. Printing and related support activities, and petroleum and coal products industries contracted. Of the 18 manufacturing industries, 16 reported growth. Makers of computer and electronic products said "increased demand, labor constraints and upstream supply delays are pushing lead times". "This is more prevalent with worldwide than USA -based suppliers". Continued Chinese economic success despite COVID-19 may prompt some countries still struggling to recover economically from the pandemic to view the Chinese state-owned company model as an answer to stimulate their domestic economies.
New orders dropped 6.4 points to 61.1 percent, while production lost four points to hit 60.7 percent. "Labor market difficulties at panelists' companies and their suppliers will continue to restrict the manufacturing economy expansion until the coronavirus (COVID-19) crisis abates".
"These declines, though were offset by Chemicals expanding, especially with the dollar weaker, so our chemicals should be more attractive overseas", he said.
Manufacturers mostly described demand as strong last month, but anxious about labor and input supply constraints.
The non-manufacturing PMI has remained above 50 for 11 consecutive months, data from the NBS showed. With state-owned companies only reaching 80% productivity of private Chinese firms, the Chinese economy may be even stronger than the PMI index indicates. "The impression is that over the second half of the year we will start to see that...and that is why the second half will be more profitable and better than the first half, which was projected to be strong".
Food producers reported that "labor continues to be one of our largest challenges".
In the meantime, he noted that as the us dollar is weakening, it is supporting high commodity prices, coupled with the expectation that New Export Orders could head up in the coming months.