China’s factory activity grows at fastest pace since October, private survey shows, beating official reading

China’s factory activity gathered speed in January, according to a private survey released Monday, as manufacturers accelerated production and front-loaded cargoes ahead of the extended Lunar New Year holiday.

The seasonally-adjusted RatingDog China General Manufacturing PMI, conducted by S&P Global, rose to 50.3 in January from 50.1 the previous month, in line with analysts’ expectations of 50.3 in a Reuters poll. A reading above the 50 benchmark indicates an expansion, while one below that suggests contraction.

That marked the strongest level since October, when the private-surveyed PMI came in at 50.6.

Production accelerated last month as new orders picked up both at home and abroad, prompting firms to hire additional staff to cope with rising workloads and clear outstanding orders.

Total new orders expanded for the eighth straight month while new export orders rebounded, primarily buoyed by increased demand from overseas buyers, particularly Southeast Asia.

Business confidence, however, slipped to a nine-month low, as firms worried about rising costs, the private survey showed. Corporate expenses expanded at the fastest rate in four months, pushing factory-gate prices up for the first time since November 2024.

Metal prices, in particular, surged during the latest survey period, sending the input cost inflation to the highest since last September, the survey showed.

“Looking ahead, if cost pressures persist while demand recovery is limited, profit margins will remain under pressure,” said Yao Yu, founder at RatingDog.

The reading was better than an official survey released on Saturday, which showed manufacturing activity unexpectedly contracted in January, coming in at 49.3, compared with 50.1 in the previous month, according to the National Bureau of Statistics.

The RatingDog private survey, which samples a smaller group of export-oriented manufacturers, has typically painted a brighter picture than the official polls that cover a broader range of firms.

NBS officials attributed the slump to a seasonal slowdown and softer global demand. Local media reported that some factories halted production last month to allow their workers to return home ahead of the upcoming Lunar New Year.

This year’s Lunar New Year holiday has been extended to nine days for the first time, stretching from Feb. 15 to Feb. 23, as Beijing aims to boost domestic spending on travel, tourism, dine-out services and leisure activities during the holiday.

The pair of PMI data also provided an early glimpse of how the world’s second-largest economy fared at the start of this year. China’s economy hit the government’s 5% growth target last year, underpinned by strong exports as manufacturers ramped up shipments to non-U.S. markets amid higher U.S. tariffs.

Economists, however, have warned of persistent deflationary pressures, with retail sales weakening to the slowest pace in three years. Fixed-asset investment also recorded its first annual decline in decades, contracting 3.8% last year, as a deepening property slump and local governments’ fiscal constraints curbed investment.