Investing.com — China’s business activity rose better than expected in January, government data showed Tuesday, as recent easing of COVID measures and Lunar New Year holidays both break three-month slump It was useful for
China (PMI) rose 50.1 in January, beating expectations of 49.8 and December’s 47.0. Readings above 50 indicate shrinkage.
The country’s large services sector also rebounded sharply after a three-month decline, rising to a six-month high of 54.4. This was above expectations of 52.0 and well above December’s figure of 41.6.
This prompted a rebound from 42.6 the previous month to 52.9 in January, with the reading now comfortably back in expansion territory.
Better-than-expected data show China, the world’s second-largest economy, is clearly recovering from a COVID-induced lull after marking a clear turn from its strict zero-COVID policy last January. indicates that Recent economic growth data also showed better-than-expected growth in the fourth quarter.
The country has eased most COVID measures and reopened borders after three years of intermittent lockdowns brought economic activity to a halt.
The week-long Chinese New Year holiday also factored into the positive numbers for January given that it was the first Chinese New Year holiday in three years without COVID restrictions. Economic domestic travel and retail spending rebounded sharply during the week, according to state media reports.
The government also recently reiterated that it plans to support local economic growth with more spending measures.
However, the country still faces headwinds in the short term, calling into question the timing of a larger economic recovery. The number of COVID-19 cases is increasing at near-record levels, potentially disrupting activity.
Analysts also warned that global economic headwinds, including a potential US recession and tightening trade restrictions on Chinese companies, could hamper a potential recovery this year.
Still, the prospect of an eventual recovery for the Chinese economy in 2023 has spurred increased capital inflows into the local market in recent months.