February 1, 2023: In January, China’s factory activity bounced back and expanded for the initial time since September, data from the national bureau of statistics revealed.

The official manufacturer purchasing managers’ index (PMI) increased to 50.1 in January, over the 50-point mark that separates growth from contraction. That’s compared to December’s reading of 47.

Non-manufacturing PMI increased to 54.4, the highest level since June 2022. It was a sharp development from a reading of 41.6 the last month, backed by a strong rally in services and construction activities.

Despite better-than-anticipated readings, an “impressive rebound” is yet to be seen, Citi economists said.

“This set of PMI data confirmed that reopening and peak infections have set the staging for a broad-based economic,” Citi’s chief China economist Xiangrong Yu and his team.

“The rebound so far is not caveat, with significant corporates beating, supply side fading due to holiday, and services businesses yet to show an impressive rebound,” they wrote.

Citi added that the recent readings add upside risk to its forecast for China’s gross domestic product for 2023 as it anticipates further supportive financial policies from the administration in the year’s first half.

Goutai Junan International’s chief economist Hao Zhou stated the latest economic data release showed that a fast reopening had boosted the economy, the services sector.

“The darkest hour is going, and the market is almost ready to embrace a fast economic recovery in China, boding well for the China-related assets,” he said.

Zhou said China’s GDP for the following quarter of 2023 will be “under the spotlight.” He predicted that the reading might be in the 8% range due to a low base seen in a few periods a year back.