China: Manufacturing and non-manufacturing PMIs decline in January
Latest reading: China’s official NBS Manufacturing PMI declined to 49.3 in January 2026, down from 50.1 in the prior month and below market expectations of 50.0. The reading indicates a renewed contraction in factory activity at the beginning of the year, as muted demand and cautious business sentiment continued to weigh on performance amid structural pressures. New orders returned to contraction from expansion in December, while output growth moderated compared with the previous month. External demand also softened, foreign sales weakened further, employment conditions remained weak, and purchasing activity dropped sharply.
Meanwhile, the Non-Manufacturing PMI slipped to 49.4 in January from 50.2 in the previous month, undershooting expectations of 50.3 and marking the lowest level since December 2022. The decline was driven by restrained consumer spending and ongoing stress in the property sector. Both new orders and foreign demand contracted at a steeper pace, while employment conditions remained subdued, signaling continued slack in the labor market.
Panelist insight: Digging deeper into the data, Nomura analysts said:
“Although the pronounced deterioration in the official PMIs in January may be partly attributable to elevated December readings due to incomplete seasonal adjustments, this technical factor does not negate the underlying reality of weakening growth momentum. Furthermore, the later-than-usual Spring Festival may have provided an upward bias to the January PMI readings, as the postponed holiday travel rush may have extended the working periods for migrant workers in January.”