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Chinese firms see renewed modest falls in output, new orders in Jan

04 Feb '22
2 min read
Pic: Waihs | Dreamstime.com
Pic: Waihs | Dreamstime.com

The recent uptick in COVID-19 cases in China and subsequent round of fresh restrictions weighed in on manufacturing performance in the country at the start of 2022, according to London-based information provider IHS Markit. Companies registered renewed falls in output and new orders during January, though in both cases rates of reduction were only modest.

Meanwhile, new export business in China fell at the quickest pace since May 2020, and supply chain delays worsened.

Average input prices rose at a slightly quicker, but modest rate. Prices charged meanwhile increased following a slight reduction in December, IHS Markit said in a press note.

Manufacturers were confident that output would increase over the next 12 months, often due to forecasts that market conditions will strengthen as the pandemic is brought under control.

The headline seasonally-adjusted Caixin China purchasing managers’ index (PMI) compiled by IHS Markit fell from 50.9 in December to 49.1 in January. This signalled the second deterioration in overall business conditions in the past three months, though the rate of decline was only slight.

Caixin is a media group in China dedicated to providing financial and business news, data and information.

After rising in the prior two months, manufacturing production across China fell during January. Though modest, the rate of reduction was the quickest seen since last August, with a number of firms linking the fall to lower sales amid the recent uptick in COVID-19 cases both at home and overseas.

Total new orders fell modestly at the start of the year, with weaker external demand a key factor weighing on overall sales. Moreover, new export orders fell at a solid pace that was the quickest seen since May 2020.

Lower intakes of new work led to a renewed, albeit marginal fall in purchasing activity during January. Inventories at manufacturing companies also declined, with both stocks of inputs and finished items falling for the first time in three months.

The rise in COVID-19 cases and fresh restrictions to contain the virus contributed to a further deterioration in supplier performance. The rate at which average delivery times lengthened was the most marked for three months.

Although input prices rose at the fastest pace for three months, the rate of inflation was mild overall and much slower than that seen on average in 2021. Output prices rose at an identically mild pace, following a slight reduction in December.

Fibre2Fashion News Desk (DS)

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