(Yicai Global) Feb. 1 -- Factory activity in China remained in negative territory for a sixth month in a row in January, despite edging up from December after Covid-19 controls were eased, while manufacturers expressed increased optimism.

The Caixin manufacturing purchasing managers’ index rose to 49.2 last month from 49 the month before, according to figures the financial media group released today. A level below 50 indicates contraction.

The official manufacturing PMI, published by the National Bureau of Statistics yesterday, rose to 50.1 from 47 in the same period, expanding after a three-month contraction. The private Caixin index surveys smaller, private firms, while the NBS monitors larger, state-owned companies.

Supply and demand remained weak, with the sub-indexes for production and new orders staying in negative territory for the fifth and sixth consecutive month, respectively, despite nudging higher. The sub-index for new exports picked up, but also remained in contraction for the sixth month in a row because of the increased risk overseas economic recession.

The supplier delivery time sub-index jumped while staying in contraction as Covid-19 control measures were relaxed and the pressure on supply chains eased, but logistics and transport services have not yet fully recovered due to labor shortages.

The employment sub-index was also stuck in negative territory, though it improved. Surveyed companies said they had fewer employees due to Covid-19 infections, with many not being able to return to work and some positions still vacant due to staff leaving.

But corporate confidence increased in January, with the production and operation expectations index climbing to the highest since May 2021. The adverse impact of Covid-19 on the economy was still being felt last month, but manufacturers became more optimistic, said Wang Zhe, senior economist at Caixin Think Tank.

Uncertainty surrounds how Covid will develop, so firms should be fully prepared to respond to a new wave of the virus, he said, adding that the main focus of the country’s economic work should be on speeding along the economic recovery and promoting normal production and social order.

Editor: Martin Kadiev