China's Soft PMI Data Suggests Domestic Challenges Carried Over Into 2026

2026-02-02 02:53:00 ET

By Lynn Song, Chief Economist, Greater China

Official manufacturing PMI falls back into contraction

China's January PMI fell back into contraction at 49.3, down from December's 50.1. This came in well below forecasts for another month of expansion. Manufacturing PMI has been in contractionary territory for nine of the past 10 months. This suggests that December's data may have been a blip rather than the start of a recovery trend. With that said, soft PMI data has not particularly been reflected in the hard activity data. Industrial production generally had a strong year in 2025. We'll have to wait until the hard data for January-February is published in mid-March to see if this divergence continues....

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