(Yicai) Feb. 2 -- China’s manufacturing purchasing managers’ index fell back below the boom-bust line of 50 in January, after briefly returning to positive territory in December, as activity cooled amid seasonal slowdowns in some industries and persistently weak market demand, according to the latest data.

The manufacturing PMI for January slid 0.8 percentage point from the previous month to 49.3 percent, according to data released by the National Bureau of Statistics on Jan. 31.

The return of the PMI to below the 50 benchmark indicates that the foundations of China’s economic recovery are still fragile, said Zhang Liqun, a special analyst at the China Federation of Logistics & Purchasing. The market continues to produce insufficient demand, while businesses remain uncertain about future market trends and how effective policy support will be. There is an urgent need for the fundamental forces driving economic recovery to be strengthened, he added.

Zhang called for a significant increase in government investment in public goods to boost demand and hike corporate orders. Stronger macroeconomic management is needed to correct market failures, shore up recovery and lay a solid foundation for a good start to the country’s 15th Five-Year Plan, which begins this year.

The slowdown in demand is mainly due to two pressures, said Wen Tao, an analyst at the China Logistics Information Center. First, there are seasonal factors. As temperatures drop across the country and with the eight-day Chinese New Year holiday approaching, construction sites and factories have scaled back operations, dragging down related demand. In addition, some industries pushed hard last month to meet their full-year targets, pulling forward some of their demand and dampening market needs in January.

The non-manufacturing PMI, which includes construction and services, also weakened in January, slumping 0.8 percentage point from the previous month to 49.4 percent. Within that, the services PMI dipped 0.2 percentage point to 49.5 percent, while the construction PMI saw a sharper drop, tumbling 4 percentage points to 48.8 percent.

Construction activity typically slows as the weather gets colder, said Wu Wei, an expert at the China Logistics Information Center. At the same time, as the Spring Festival holiday approaches, many migrant workers return home, causing some construction projects to shut down temporarily. After the holiday, investment-related demand is expected to be released in a more concentrated way, supported by policy guidance and market demand, which will help lift sentiment in the construction sector again.

The composite PMI output index, which combines the manufacturing PMI's production gauge and the non-manufacturing PMI, tumbled to 49.8 percent from 50.7 percent in January.

Editor: Kim Taylor