In 2024, profits in China’s industrial sector fell by 3.3% compared to the previous year, marking the third consecutive year of decline. Additionally, the country’s Purchasing Managers’ Index (PMI) for the manufacturing sector decreased in January compared to December. The index fell slightly below the neutral threshold of 50 points.

The National Bureau of Statistics (NBS) released this data today, Monday, showing that January’s PMI dropped to 49.1 points. Earlier, a Reuters survey had predicted that the PMI for January would reach 50.1 points, according to CNBC.

China’s factory production activities unexpectedly contracted in January. The decline in PMI is believed to be caused by the slow season preceding the Chinese Lunar New Year. Previously, the PMI had shown growth for three consecutive months. In light of this situation, calls for strengthening financial support to stimulate the economy have increased. China’s PMI was 50.1 points in October, 50.3 in November, and 50.1 again in December.

Goldman Sachs Chief Economist Hui Shan stated that production activities in January were disrupted as migrant workers returned to their hometowns ahead of the Lunar New Year, which began on January 29. This disruption contributed to the drop in the Purchasing Managers’ Index (PMI).

Earlier on Monday, the CSI 300 Index of China’s blue-chip stocks rose, but it declined after the NBS released the PMI data.

Bruce Pang, a senior research fellow at the National Institution for Finance and Development (NIFD), commented that although both the PMI and blue-chip stock indices have fallen, the overall demand trend remains positive.

Senior NBS statisticians Zhao Qinghe and Zhao Qinghe said that indices measuring the prices of primary raw materials for purchasing and selling improved in January. Most producers are confident about business expansion after the Lunar New Year holiday.

Meanwhile, China’s non-manufacturing PMI dropped to 50.2 points in January from 52.2 points in the previous month. The non-manufacturing PMI includes production activities in the service and construction sectors.

However, the PMI for China’s service sub-sector rose to 50.3 points in January, driven by increased demand during the holiday season. Public transport, hotels, food, and beverage sub-sectors experienced significant demand growth during this period.