Dai Dingyi, Vice Chairman of China Federation of Logistics and Purchasing
The national purchasing managers index rose to 45.3 in January on a 100-point scale where numbers below 50 indicate a contraction, up from December’s 41.2, the government-sanctioned China Federation of Logistics and Purchasing said.
China still faces gloom elsewhere, with exports down and weaker retail sales growth. The logistics federation said the manufacturing work force shrank in January. But economists expect to start seeing the effects of a huge government stimulus package in coming weeks.
Merrill Lynch economists Ting Lu and T.J. Bond said in a report the latest PMI ‘undoubtedly points to a recovery in China’. They said they expect a rebound as early as the second quarter of the year.
Zhang Liqun, a government economist, in a statement released by the Logistics Federation, said, ‘The January PMI indicates China’s economy is bottoming out and the trend of a recovery is gradually taking shape.’
But Citigroup economist Ken Peng cautioned that it might be too early to expect a recovery. He said consumer demand could weaken as retailers end deep discounts offered over last month’s Lunar New Year holiday.
He said in a report, ‘Being less bad is not the same as recovery.’