It may be a new year – or one about to be with Chinese New Year – but nothing much has changed in the Chinese economy.
Its manufacturing and non-manufacturing sectors both continued to improve in January, according to the Chinese government.
The official manufacturing purchasing managers index (PMI) fell to 51.3 in January, down from 51.6 in December.
This index measures perceived changes in activity levels across China’s manufacturing sector from one month to the next. Anything above 50 signals that activity levels are improving while a reading below suggests they’re deteriorating.
The distance away from 50 indicates how quickly activity levels are expanding or contracting.
So while the manufacturing gauge fell from December, and missed forecasts for a smaller decline to 51.5, activity levels still improved in January, just at a slower pace.
In contrast to the manufacturing gauge, the separate non-manufacturing PMI improved over the month, rising to 55.3, an increase of 0.3 points from December.
This PMI measures changes in all business sectors apart from manufacturing, including not only services firms but also the construction sector.
At 55.3, January’s result points to an economy that is continuing to improve at a decent clip in early 2018.
Despite that news, both readings largely reflect what was already known by markets, helping to explain why there’s been very little reaction to either of the reports.
That may change later in the week with the release of separate China manufacturing and services PMI readings from IHS Markit. This private sector survey has proven to be of more interest to markets than the official PMI report in recent years.