China’s official purchasing managers’ indices slipped back into contraction in January, highlighting uneven momentum at the start of 2026 as demand indicators weakened even while parts of the supply side held up.
The official manufacturing PMI fell to 49.3 in January from 50.1 in December, dropping below the 50-point line that separates expansion from contraction. Authorities attributed the pullback to seasonal effects and weak demand, noting that some industries entered a traditional lull and that “effective market demand remained insufficient.”
Beneath the headline, the data showed resilience in output alongside weaker orders. The production sub-index stood at 50.6, remaining in expansion territory, while the new orders index declined to 49.2, pointing to softer demand conditions. The divergence suggests factories continued producing, but were receiving fewer new bookings than in the prior month.
Price measures turned notably firmer. Input costs rose to 56.1 and factory-gate prices increased to 50.6, with the factory-gate price index moving back above 50 for the first time in 20 months, signaling improving pricing conditions after a long period of deflation pressure. Large enterprises remained a stabilizing force with a PMI of 50.3, while medium-sized and small firms stayed in contraction. High-tech manufacturing outperformed, with a PMI of 52.0 for a second consecutive month above what is considered a relatively strong level.
The slowdown was not limited to factories. The non-manufacturing PMI fell to 49.4 in January, down 0.8 percentage points from the prior month, dragged lower by construction. The services business activity index edged down to 49.5, though financial services segments remained robust. Construction activity weakened more sharply, with its index dropping to 48.8 as cold weather and the approach of the Lunar New Year holiday slowed work, and expectations in the sector dipped below 50.
Economists watching the release said the PMI pattern reinforces a familiar theme: external-facing and larger firms appear to be holding up better than domestically oriented activity, and the next confirmation will come from January–February “hard” data due later in the quarter.
Policy messaging has leaned toward strengthening domestic demand and encouraging a supply-demand rebalancing through innovation. Officials have pointed to a longer-run push where “new demand steers new supply and new supply creates new demand.” For now, the January PMI snapshot suggests the near-term challenge remains demand softness—especially among smaller firms and in construction-linked activity.