PMI declines for first time in 2 years

Manufacturing sector activity falls in Jan

Activity in China's factory sector stalled for the first time in more than two years in January, official data showed on Sunday, piling pressure on the economy to regain steam after expanding at its weakest in 24 years in 2014.

However, the non-manufacturing sector was shown to have maintained resilience during the month, helping pacify worries over the Chinese economy.

The official Purchasing Managers' Index (PMI), covering mostly large State-owned enterprises, dropped to 49.8 in January, down 0.3 percentage points from the month before, the National Bureau of Statistics (NBS) announced in a statement on its website.

This marked the first time in 28 months that the official PMI has fallen below the 50-point level which demarcates expansion from contraction.

Regarding the falling PMI reading, Zhao Qinghe, a senior NBS statistician, said reduced activity was seen in manufacturing firms due to the New Year holidays and the upcoming traditional Chinese Spring Festival holidays.

The continued decline in major commodity prices had impacted related businesses, and the overall subdued demand in both global and domestic markets led to a moderation in new order growth, the statistician explained in a separate statement on the bureau's website.

"The holidays, during which some firms had decreased business activity, certainly weighed on the PMI, but the January reading that fell below 50 reflects mainly downside risks to the economy," Zhou Jingtong, a senior analyst at Bank of China's Institute of International Finance in Beijing, told the Global Times on Sunday.

China's economic growth may decelerate further to slightly above 7 percent in the first quarter of 2015, Zhou estimated.

The GDP growth came in at 7.3 percent in the fourth quarter of 2014, bringing the year's expansion to a 24-year low of 7.4 percent.

Still, business activity in the non-manufacturing sector remained above 50 in January, although the reading edged down 0.4 points to 53.7, figures released by the NBS on Sunday showed.

A range of consumption-related industries such as retail, telecommunications, Internet software, and postal and courier services had recorded brisk business activity during the past month, in a fresh sign that the non-manufacturing sector as a whole is serving to steady economic growth, Zhao, the NBS statistician, emphasized.