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China’s Manufacturing Segment Contracts for 2nd Straight Month 
February 04, 2019
 
China’s manufacturing activity contracted Y/Y in January as the official manufacturing Purchasing Managers' Index (PMI) for January was 49.5, according to the Chinese National Bureau of Statistics although it was up sequentially from the 49.4 reported in the previous monthwhen China's manufacturing PMI fell into contraction territory for the first time since July 2016.

The PMI — a widely watched indicator — is a survey of businesses in a specific industry about the operating environment. A reading above 50 signals expansion in the sector from the previous month, while one below 50 represents contraction.
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China's services PMI for January came in at 54.7 up sequentially from 53.8 reported in the previous month. The services sector accounts for more than half of the Chinese economy and has helped cushion the impact of a slowing manufacturing industry.  Despite the better-than-expected PMI numbers, some economists said the statistics — particularly the manufacturing data — still point to a weakening Chinese economy.The announcement offers an early insight into business conditions in China in the new year after several American companies with exposure to the country — such as Caterpillar, Nvidiaand Apple— warned that sales will likely slowin 2019.  Last year, the Chinese economy grew 6.6 percent — the slowest pace in 28 years.