BEIJING, Jan 30 (Reuters) – China’s factory activity likely stalled in the first month of 2026, a Reuters poll showed on Friday, as still sluggish domestic demand held back production.
The survey of 25 economists forecast the official purchasing managers’ index (PMI) would dip to 50.0 in January from 50.1 in December. The data is due on Saturday.
The projection follows a surprise recovery in December, when China’s vast manufacturing sector snapped a record eight-month contraction streak.
The headline manufacturing PMI likely benefited from this year’s unusually late Lunar New Year holidays, analysts at Mizuho Securities said.
“With the holiday landing in late February, many migrant workers may not return to their jobs until mid-March, prompting factories to front-load their manufacturing activity to the beginning of the year,” Mizuho said.
Factory activity could face more pressure next month when holiday travel gets into full swing. The Lunar New Year holiday started in late January last year.
China’s economy grew 5% in 2025, hitting Beijing’s official target, with exports playing a heavy-lifter despite U.S. tariff pressures. Growth, however, has remained uneven. Retail sales weakened further in the final quarter, dragging fourth-quarter GDP growth to a three-year low.
Policymakers have vowed to make boosting domestic demand their top priority this year. The government front-loaded 62.5 billion yuan ($8.99 billion) from ultra-long special treasury bond funds to support its scheme offering consumers subsidies to replace a range of products from home appliances to smartphones.
But persistent weakness in the property market, a major source of household wealth, would mean authorities have their work cut out to persuade consumers to open up their wallets.
Subdued demand at home has also pushed manufacturers to slash prices to defend market share, intensifying deflationary pressures and weighing on corporate earnings.
Beijing has stepped in to rein in excessive price wars under its so-called “anti-involution” crackdown. The crackdown helped bolster the bottom line for companies.
Industrial profit rose last year for the first time since 2021, and grew 5.3% in December from a year earlier, reversing a 13.1% decline in November.
China is likely to set this year’s official growth target between 4.5% and 5%, the South China Morning Post reported, as policymakers take a cautious approach to stimulus with a stock market bubble on their minds.
Analysts polled by Reuters forecast the private sector RatingDog PMI to stand at 50.3, up from 50.1 a month prior. The data will be released on February 2.
($1 = 6.9489 Chinese yuan)
(Reporting by Ethan Wang and Ryan Woo; Polling by Pranoy Krishna in Bengaluru and Jing Wang in Shanghai; Editing by Sam Holmes)
