China Manufacturing PMI

The Caixin China General Manufacturing PMI edged up to 49.2 in January 2023 from December's 3-month low of 49.0 but less than market consensus of 49.5. This was the sixth straight month of drop in factory activity, amid sluggish operations after an abrupt shift in COVID policy. Output fell the least in 5 months while a fall in new orders eased. Buying levels dropped at the slowest pace in 3 months; while foreign demand remained weak, falling for the sixth month. Meantime, employment shrank for the 10th month with backlogs of work up for the first time since May 2022. Delivery times improved notably despite logistics had not returned to normal. On inflation, input and output prices diverged for the fourth month running. The rise in input cost was due to elevated cost of raw materials, particularly metals, while output prices fell, on sluggish market activity. Finally, sentiment was at its highest since April 2021, buoyed by hopes of better economic conditions and a rebound in orders.