China's private sector activity expanded at the fastest pace in seven years in January driven by accelerated rates of activity growth across both manufacturing and services.
The Caixin composite Purchasing Managers' Index rose to 53.7 in January from 53.0 in December, data from IHS Markit showed Monday.
The services PMI came in at 54.7 at the start of the year compared to 53.9 in December. At the same time, manufacturers signaled the quickest upturn in production levels since December 2016.
Both service providers and manufacturers registered a further increase in new business in January amid reports of firmer client demand. At the composite level, total new orders grew at a solid pace that was similar to that recorded at the end of 2017.
Employment data continued to signal divergent trends, with rising headcounts at services companies contrasting with further job cuts at manufacturers. Consequently, composite employment rose slightly, after broadly stagnating between August and December of 2017.
Service providers posted a faster rise in cost burdens, with the rate of inflation the steepest since April 2012. The marked slowdown in the manufacturing sector led composite input prices to increase at the slowest pace for five months.
Despite strong cost pressures, manufacturers and service providers raised their output charges at softer rates in January. At the composite level, average charges increased at the slowest pace in seven months.
Companies were generally optimistic that activity would increase over the next 12 months. However, improved confidence across the manufacturing sector contrasted with a slight dip in sentiment at service providers.
"Caixin PMI readings in January showed that the Chinese economy had a good start to 2018," Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group said.
"Looking forward, we should watch for stability of demand in the manufacturing industry and the impact of growing costs on the profitability of service providers."
by RTT Staff Writer
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