China’s Factory Activity Contracts in January, Reversing Recent Growth

The Lunar New Year holiday and weak domestic demand contribute to a manufacturing slowdown, with PMI falling below expectations.

China's official manufacturing PMI dropped to 49.1 in January, signaling contraction after three months of expansion and missing analysts' forecasts of 50.1.
The decline is partly attributed to the Lunar New Year holiday, as many workers leave cities to return home, disrupting factory operations.
Non-manufacturing PMI, covering services and construction, also weakened, falling to 50.2 from 52.2 in December, reflecting slower growth in these sectors.
Despite meeting its 2024 growth target of 5%, China's economy remains challenged by weak domestic demand, elevated unemployment, and ongoing deflationary pressures.
US President Donald Trump's proposed tariffs on Chinese imports, potentially as high as 60%, threaten to further strain China’s export-reliant economy in 2025.