China factory activity still solid

Posted February 02, 2017

The rest of the economy also appears to be holding up well - the official non-manufacturing PMI edged up from 54.5 to 54.6.

India's PMI rose to 50.4 from 49.6, Myanmar's up to 51.7 from 49.4, Indonesia up to 50.4 from 49.0 and that of Thailand stood at 50.6.

A reading above 50 indicates expansion while that below shows contraction in the sector.

New order volumes were mostly driven by stronger demand from domestic sources, some manufacturers noting rising sales to energy sector clients in particular.

IHS Markit forecasts a 6.9% rise in GDP for FY16, with growth anticipated to accelerate to 7.4% in FY 2017.

The January survey shows the fasted rate of job creation since last July, although manufacturers still experienced a rise in backlogs - the first in three months.

Eurozone manufacturing activity expanded at the fastest pace in nearly six years in January while United Kingdom factory activity held near a two-and-a-half year high, the latest purchasing managers' surveys compiled by IHS Markit have shown. Much of the increase in costs and prices can be linked to the weakened exchange rate and higher global commodity prices.

Factory purchasing managers also reported mounting costs and prices.

However, with business confidence climbing to an eight-month high, Dobson added the outlook for the sector remained fairly bright. Longer-term expectations remained at 3 percent.

The release said the main factors contributing to the above-50.0 PMI reading were growth of both new orders and output.

The healthy expansion came despite a record increase in input prices, as inflationary pressure continues to build following the devaluation of sterling since the vote to leave the EU.

However, analysts at the research firm have raised some concerns.

The prolonged recession in the sector - a result of the strong decline in output and new orders - has led companies to reduce employee numbers.