A private survey on China's manufacturing sector showed on Friday that factory activity contracted in January — confirming views that the world's second-largest economy started the new year on soft footing.
The Caixin/Markit Manufacturing Purchasing Managers' Index (PMI) came in at 48.3 in January, compared to 49.7 in December. Analysts polled by Reuters had expected the Caixin PMI to be 49.5 last month.
A reading above 50 indicates expansion, while a reading below that level signals contraction.
The PMI is a survey of businesses about the operating environment. Such data offer a first glimpse into what's happening in an economy, as they are usually among the first major economic indicators released each month. Investors have been closely watching economic indicators from the world's second-largest economy for signs of trouble amid domestic headwinds and the ongoing U.S.-China trade dispute.
The Caixin/Markit measure followed the Thursday release of China's official manufacturing PMI by the National Bureau of Statistics. The official data came in at 49.5 — higher than 49.3 expected by analysts in a Reuters poll and the 49.4 reported in the previous month.
Thursday's soft manufacturing data showed that Beijing would have to step up support for the slowing economy, economists said. Growth in China slowed to 6.6 percent last year — the lowest expansion rate in 28 years.
Chinese authorities have introduced measures to boost the economy over the past year, but those policies may take time to be effective, economists said. So, economic growth in China could stay weak in the first half of 2019 given both external and domestic challenges, Citi economists wrote in a Thursday note.
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