(Yicai) Feb. 1 -- Activity in China's manufacturing sector grew in January for the third month in a row, an expansionary period last matched in June 2021, a private survey showed.

The Caixin manufacturing purchasing managers' index came in at 50.8 last month, the same as in December, according to data released today by financial media group Caixin. The figure was 50.7 in November and 49.5 in October. A reading above 50 indicates expansion.

The official manufacturing PMI, published yesterday by the National Bureau of Statistics, snapped a three-month decline to edge up 0.2 percentage point to 49.2.

China’s he economy still face significant challenges, said Wang Zhe, senior economist at Caixin's think tank. Demand is weaker than supply, employment pressures are high, and market expectations are subdued, he noted.

Half of the Caixin PMI sub-indexes dropped. Those for production, new orders, purchase prices of main raw materials, and manufactured inventory fell, while staying in expansion territory, but the ex-factory prices index shrank, showing that supply and demand expansion slowed, companies faced rising cost pressures, and profit margins were squeezed.

The remaining sub-indexes all rose. That for new export orders jumped above 50 for the first time in seven months. The employment index climbed to a five-month high, buy stayed in the contraction range. The raw material inventory and supplier delivery time indexes moved into expansion. The production and operation expectations index jumped to the highest since last May, but was still below its long-term average while being in expansion territory.

At the policy level, the focus should still be on promoting employment and boosting incomes and expectations, Wang said, adding that there is still room for fiscal and monetary policies and policy measures need to be stepped up. Government departments should enhance cooperation and coordination to increase the consistency of market expectations, he said.

Editor: Martin Kadiev