Activity in China's factory sector gathers pace - RatingDog PMI

2nd Feb 2026 07:37

(Sharecast News) - Actvitiy in China's manufacturing sector looked to have gathered pace last month, a closely-watched survey of private sector firms showed on Monday.

The headline RatingDog China general manufacturing PMI was 50.3 in January, up from 50.1 in December and largely in line with expectations. It was the highest reading since October.

A reading below the neutral 50.0 benchmark suggests contraction, while one above it indicates growth.

The rate of output increased for the first time in 14 months as orders picked up, including from customers in south east Asia and other overseas markets. Respondents also pointed to employment ticking higher.

However, business confidence remained unsettled, slipping to a nine-month low as costs ticked higher.

The survey was in also in contrast to China's official manufacturing PMI, which was published on Saturday.

That came in well below forecasts, falling back into negative territory, to 49.3 from 50.1 in November, with declines in both the new orders and new export orders sub-indexes.

The non-manufacturing PMI, which covers services and construction, dropped to 49.4 from 50.2, the lowest print since December 2022.

Lynn Song, chief economist, Greater China at ING, said the divergence between the two surveys suggested that "external activity continues to be stronger than domestic demand" as 2026 gets underway.

She continued: "December's data may have been a blip rather than the start of a recovery trend.

"Looking at the sub-categories, we saw a broad-based slowdown across most categories.

"In contrast, the RatingDog PMI painted a more optimistic picture. This PMI tends to have a sample size focused more on private and export-focused enterprises, and has generally done better than the official PMI over the past year or so.

"This is consistent with the story we saw for 2025, when external demand was a key growth driver, while domestic demand indicators had all been quite soft."

Yao Yu, founder of RatingDog, said: "Looking ahead, if costs pressures persist while demand recovery is limited, profit margins will remain under pressure. Policy support for initiatives many consolidate the recovery momentum in 2026."

China's economy grew by 5% in 2025, meeting government targets, as stronger global demand helped offset weaker domestic consumption. Beijing has also looked to navigate Donald Trump's swingeing tariff regime by striking deals with countries including the UK and Canada.

The Rating Dog PMI is compiled by S&P Global, based on responses to questionnaires sent to a panel of around 650 manufacturing firms. Data were collected between 12 and 22 January.