January PMI: A Subtle Signal at the Beginning of the Year

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来源：Chuan Yue Global Macro

January PMI decline is not solely due to the off-season; key disruptions include the timing mismatch of the Spring Festival and delays in local two sessions. Although weak supply and demand, along with falling new orders, signal domestic demand pressure, the highlight is rising prices—two major price indicators moving upward against the trend suggest PPI improvement. The service sector is building momentum before the holiday, while the construction industry remains sluggish, awaiting policy support. China’s economy is accelerating its shift from “growth rate” to “quality improvement.”

The January PMI decline may not be entirely attributable to the “traditional off-season,” as multiple cyclical factors intertwine. For example, due to the later Spring Festival this year, companies have some flexibility in adjusting production schedules; meanwhile, most local two sessions have not yet concluded, leading to slight delays in early-year work and project deployment, affecting short-term economic indicators.

More notably, among regions that have held their two sessions, most have lowered or maintained their 2026 growth targets, indicating that in the first year of the “14th Five-Year Plan,” localities are shifting from pursuing “growth speed” to emphasizing “quality.” This structural adjustment is also reflected in the PMI indicators—such as the EPMI and high-tech manufacturing PMI—both above the expansion line in January.

Of course, the structural contradiction of insufficient domestic demand still persists. The January PMI new orders index was 49.2% (down 1.6 percentage points month-on-month), and the PMI production index was 50.6% (down 1.1 percentage points). The simultaneous weakening on both supply and demand sides, especially with demand contracting slightly more, indicates current production activities are somewhat constrained by insufficient orders.

Meanwhile, the new export orders index in PMI also declined marginally. In January, the new export orders index fell 1.6 percentage points month-on-month, but compared to historical averages for the same period, export orders in January are not particularly weak. Additionally, the port container throughput, which was at a high level historically for January, suggests that the “export inflow” trend is likely to continue into the new year.

“Price increases” became the biggest highlight of the January PMI data. Even as supply and demand sides showed signs of slowing, the two major price indicators in PMI still rose against the trend—January’s PMI raw material purchase price index was 56.1% (up 3.0 percentage points month-on-month), and the factory gate price index was 50.6% (up 1.7 percentage points). This was mainly driven by recent increases in commodity prices. Therefore, the possibility of continued improvement in PPI growth in January remains high.

The slight decline in services PMI can be seen as a phase of “building momentum” ahead of the Spring Festival. January services PMI was 49.5%, a slight decrease of 0.2 percentage points month-on-month. Notably, there are also “warm signs” within the service sector—according to the National Bureau of Statistics, the high activity level in financial markets provided key support for the services PMI.

In comparison, the performance of the construction PMI may require more policy support. January construction PMI dropped sharply by 4.0 percentage points to 48.8%, at a relatively low level for the same period historically. This change is influenced not only by seasonal factors such as cold weather and the approaching holiday but also reflects the current slow pace of local project construction and the need for further boosting investment willingness.

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Editor: Ling Chen