China's official purchasing managers' index subsided last month as signs of a full economic bounce-back proved illusory.
The PMI dropped to 50.4 in January, down from the 50.6 recorded in the two previous months.
However, the sub-index for new orders improved marginally to 50 points in January after contractions of 48.8 and 49.9 in December and November, respectively. The new orders sub-index has only broached the 50 mark, which indicates expansion, in four months out of the last 13.
Alistair Thornton, an analyst with IHS, said the Chinese economy remained “shaky” and the recovery “fragile,” with support over the past six months reliant on loan roll-overs, corporate bail-outs and infrastructure spending.
“The economy has yet to generate the type of self-perpetuating growth that is needed to put the recovery on a comfortable footing,” he added.
“Both the small- and the medium-sized enterprise PMIs were in contraction, with large firms pulling all of the weight. That it is this fragile is testament to the severe inefficiencies building within the system.”
“Nonetheless, fragile or not, the economy is in the midst of mid-cycle upswing. IHS feels there is sufficient economic momentum and political impetus to ensure a continuation of the current expansionary phase.”
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