The pace of growth in the manufacturing sector activity across China eased to the lowest level seen in seven months during January on the back of a decline in export orders due to the latest wave of the pandemic globally. The Caixin/Markit manufacturing PMI slid lower to 51.5 in January from 53 in December, but remained above the 50-threshold indicating expansion.

January’s reading was not only less than that of the previous month but also came in lower than expectations. Economists had earlier forecast a dip to 52.7 instead.

The weakness in the overall PMI reading was driven by a reduction in manufacturing production, with its reading falling to the lowest level seen since April, coming in at 52.2. Meanwhile, new orders fell to the lowest level since June, with its sub-index reading coming in at 52.2.

What was most worrying, however, for the export-reliant economy and manufacturing sector of China was a contraction in export orders during the month of January. Export orders declined for the first time in five months as the coronavirus pandemic dented external demand.

Wang Zhe, senior economist at Caixin Insight Group remarks, “The gauge for future output expectations was the lowest since May last year though it remained in positive territory, showing manufacturing entrepreneurs were still worried about the sustainability of the economic recovery. In addition, the weakening job market and the sharp increase in inflationary pressure should not be ignored.”