China's manufacturing activity expands in January even as cost pressures intensify

This is the second consecutive month its PMI remained in expansion territory.

China’s manufaturing activity expanded at a faster pace in January with its purchasing managers’ index rising to 50.3 from 50.1 in December, remaining in expansion territory for the second consecutive month despite rising cost pressures weighed on business sentiment, according to RatingDog.

The expansion was supported by higher new orders and a renewed increase in export demand after contraction in December, with firms reporting stronger orders from Southeast Asia.

Total new orders grew for the eighth consecutive month, although the pace of expansion remained modest, with some manufacturers citing elevated prices and subdued market conditions as constraints on demand.

Employment increased for the first time in three months, enabling manufacturers to reduce outstanding workloads for the first time in eight months as capacity pressures eased.

Input prices rose for the seventh straight month, the sharpest pace since September 2025, driven mainly by higher metals prices, whilst output charges increased for the first time since November 2024, signalling mounting pressure on profit margins.

Business confidence, however, fell to a nine-month low as manufacturers flagged persistent cost pressures and uncertainty over the economic outlook, despite continued expansion in production and orders.

RatingDog said profit margins could remain under pressure if cost increases persist while demand recovery stays limited, although policy support may help consolidate recovery momentum through 2026.