PMI's Show Recovery Slows

China's official PMI released over the weekend saw both manufacturing and services miss estimates in January and decline from their December readings, indicating a broad slowdown in the recovery.

• Following the release Zhao Qinghe, senior statistician at China's National Bureau of Statistics, said "around the Spring Festival is the traditional off-season of China's manufacturing industry." He added that the recent resurgence of COVID-19 cases in China has temporarily affected the production and operation of some enterprises.
• The manufacturing index was driven by large enterprises, PMI for big companies was over 52 for the eighth consecutive month, while small companies PMI at 49.4 shows the sector is still in contractionary territory.
• In manufacturing the sub-index of new export orders dropped to 50.2. The NBS adduced lower demand over the festive period and the continued effects of the pandemic as factors driving down export orders.
• The sub-indices of employment and supplier delivery time both dropped significantly in December, standing at 48.4 and 48.8, respectively.
• The resurgence in COVID-19 hit the service sector particularly hard. Non-manufacturing PMI fell to 52.4 from 55.7 in December. Business activity in non-manufacturing fell to 51.1.
• Markets will now look ahead to the private Caixin manufacturing PMI which be released today at 0130GMT/0930HKT.