On January 31, the Service Industry Survey Center of the National Bureau of Statistics and the China Federation of Logistics and Purchasing released the China Purchasing Managers Index (PMI).

520CMD01 In January 2024, the manufacturing PMI increased by 0.2 percentage points compared with December 2023, ending the momentum of decline for three consecutive months. The composite PMI output index rose 0.6 percentage points from December 2023; The non-manufacturing PMI rose 0.3 percentage points from December 2023. On the whole, China’s economic prosperity level has rebounded, enterprise production and business activities continue to expand, and the economy will achieve a steady start in 2024.

520CMD01 From the production side, in January, the production index was 51.3%, up 1.1 percentage points from December 2023, rising to a near four-month high. From the perspective of industry, the production index of food and wine and beverage refined tea, paper printing, culture, education, sports and entertainment supplies, medicine and other industries is more than 53%, and the production of related industries is expanding rapidly.

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From the demand side, in January, the new orders index was 49%, an increase of 0.3 percentage points over December 2023, of which the new export orders index reflecting external demand increased by 1.4 percentage points over 520CMD01 December 2023, and the market internal and external demand boom has improved. From the perspective of key industries, the new order index of equipment manufacturing, high-tech manufacturing and consumer goods industry was 50.3%, 50.2% and 50.3%, respectively, all located above the critical point.

Data released on the same day showed that the service PMI in the non-manufacturing PMI in January improved by 0.8 percentage points from the previous month, ending two consecutive months of contraction. In terms of industry, 13 of the 21 industries surveyed are in the expansion range, an increase of four from December 2023, and the service industry has expanded. In addition, the construction PMI fell 3 percentage points from the previous month to 53.9%. From the perspective of market expectations, the business activity expectation index is 61.9%, which continues to be located in the high boom range, indicating that construction enterprises have strong confidence in market development.

“January PMI data shows that the economy will still tend to recover in the first half of the year, and a new round of short-term economic repair will be opened again, focusing on four positive main lines.” Shenwan Hongyuan Securities macro 520CMD01 senior analyst Tu Qiang 31 analysis that, first, in January closer to the downstream terminal of the industry production index improved more, especially before the social inventory to more obvious areas. Second, the per capita income is under pressure, but the urban labor participation rate increases, and the service consumption of residents may show the “scattered” characteristics of holiday concentration. Third, exports may continue to recover from the previous quarter. Under the background of US fiscal expansion and real estate bottoming out, short-term demand has resilience, at the same time, the gap between supply and demand in developed countries has narrowed, and import growth continues to return to demand, which will also support China’s exports. Fourth, after the holiday investment demand to accelerate again. The accelerated investment of government bond funds continues to promote the acceleration of traditional infrastructure, and at the same time, the “small peak” of real estate resumption and the improvement of financing will also support real estate investment in the short term.