CHINA’S factory activity expanded in January thanks to stable growth in output, quicker logistics and the first rise in new export orders since June, helping lift business confidence to a nine-month high, a private-sector survey showed Thursday.

The Caixin/S&P Global manufacturing purchasing managers index reached 50.8 last month, the same as December’s reading and surpassing analysts’ forecasts of 50.6. A reading above 50 indicates expansion and anything below that points to contraction.

“The manufacturing sector continued to improve in January, with both supply and demand increasing,” said Wang Zhe, senior economist at Caixin Insight.

“Quicker logistics, increased procurement and rising inventories reflected improved business confidence.”

However, he noted that employment remained in contraction, price levels were subdued and “deflationary pressures persisted.”

The release came after official data this week showed activity among the nation’s manufacturers contracting for a fourth straight month in January.

The two surveys cover different sample sizes, geographic locations and types of businesses, with the Caixin poll generally having outperformed the official one last year.

The Caixin survey offered some hope that external demand may be starting to improve with new export orders increasing for the first time since June last year, though marginally.

The export index may have been affected by the Lunar New Year which will fall on Feb. 10 this year, as factories and workers geared up for the pre-holiday shipment of goods.

Moreover, forecasts of stronger global demand, planned investment, new product release and efforts to expand into new markets drove manufactures’ confidence to their highest since April last year.

But factories continued to trim their workforce in January, while efforts to attract and secure new orders prompted them to cut product selling prices.

Heightened deflationary pressures have raised investor bets for further monetary easing after China made a deep cut to bank reserves last week to support the economy. (SD-Agencies)