Tough start to year for China

China’s factory sector unexpectedly shrank for the first time in nearly two and a half years in January and firms see more gloom ahead, an official survey showed yesterday, raising expectations that policymakers will take more action to forestall a sharper slowdown.

The official Purchasing Managers’ Index (PMI) fell to 49.8 in January, the National Bureau of Statistics said, a low last seen in September 2012 and a whisker below the 50-point level that separates growth from contraction on a monthly basis.

The December level was 50.1, and a Reuters poll saw a better result, 50.2, for January. Only one of 11 economists in the poll predicted a January contraction.