Chinese factory sector activity cools more than expected in January, PMI shows

China´s economy may have lost some momentum at the beginning of the year, economists said following the release of a weaker than expected reading on the country´s factory sector, but some signs in the report pointed to more robust external conditions helping to prop up demand.

Caixin´s purchasing managers' index for China´s manufactiring sector fell from 51.9 in December to 51.0 for January, undershooting forecasts for a dip to 51.8.

"While still a relatively solid reading, [that] suggests that the current recovery may be losing momentum," Julian Evans-Pritchard, China economist at Capital Economics, said in a research note sent to clients.

Friday´s data was weaker than the "official" PMI published two days earlier.

"We would but more weight on today’s release, however, since the Caixin index has a stronger track record of capturing cyclical trends and its compiler, Markit, appears to do a better job of ironing out the impact of seasonal distortions caused by Chinese New Year," Evans-Pritchard said.

However, a gauge of export orders climbed to a two-year high, while a a gauge of prices paid by firms in the sector fell back, suggesting that price pressures eased at the start of 2017.

"Early indicators for January, including today’s PMI release, suggest that the recent recovery remains largely intact for now but has begun to lose steam. Given clear signs that the property market is cooling and that monetary and fiscal policy have become less supportive, we expect economic growth to begin to slow again in the coming quarters."