Mixed trends in Chinese manufacturing sector in January, PMIs show
Manufacturing data released overnight in China provided mix readings on the state of the sector at the start of the year.
The Caixin China manufacturing sector purchasing managers´ index, which better captures trends among smaller and medium-sized companies, rose from a reading of 48.2 for December to 48.4 in January (consensus: 48.1).
To take note of, a gauge of new orders recorded its best reading since June 2015.
However, the 'official' manufacturing sector PMI retreated from the reading of 49.7 seen in December to 49.4 (consensus: 49.6) a two-and-a-half year low.
Meanwhile, the country´s non-manufacturing PMI came in at 53.5, down 0.9 points from the month before.
The manufacturing PMI compiled by the National Bureau of Statistics attaches a higher weighting to big state-owned enterprises.
"Since the big overcapacity and struggles are in the big SOEs, this could explain the current deviation," analysts at Danske Bank said in a research note sent to clients.
"For policy makers, the data will send a mixed signal and is unlikely to change the assessment of a fragile economy with significant structural issues. We continue to look for more interest rate cuts over the coming quarters - mainly to ease the debt servicing burden of Chinese companies.
"Chinese policy makers may be reluctant to cut rates until they have seen a period of calmer waters for the Chinese currency following the significant pressure in early January," Danske Bank said.
"The upshot is that today's data suggest that conditions remained subdued last month but, on balance, don't point to a further deceleration," said Julian Evans-Pritchard, China economist at Capital Economics.
"The hard data (trade, industrial production, investment, etc.) should provide a much clearer picture, although given the usually volatility surrounding Chinese New Year we may have to wait until March (when we have the combined data for January and February) to accurately gauge conditions going into 2016."