China factory activity loses steam in January

China’s factory activity slowed in January, official data showed on Saturday, as a key measure of industrial health — the manufacturing purchasing managers’ index — slipped to 49.3, the National Bureau of Statistics said.

The reading fell below the 50-point mark that divides expansions and contractions, also significantly behind the 50.1 forecast by a Bloomberg survey of economists.

NBS statistician Huo Lihui said in a statement that the data reflected “insufficient effective market demand”, as well as a “traditional off-season” for certain manufacturing sectors.

December’s slight uptick at 50.1 had snapped an extended negative streak that began in April.

The world’s second-largest economy is facing a persistent domestic consumer slump, weighing on activity even as exports remain robust.

The decline in factory activity shown Saturday was the result of “weak domestic demand”, Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, wrote in a note.

“Economic activity may soften in (the first quarter),” Zhang said.

Last year, exports represented the “pillar of growth”, he said, adding that the sector’s “sustainability is very important for the growth outlook”.

China achieved a historic trade surplus of $1.2 trillion last year — a key strong spot as consumer sentiment at home remained subdued.

Beijing has pledged “forceful” measures to boost demand in coming years, with some key policies expected to be announced in March with the release of the government’s newest “five-year plan”.