The Caixin China General Service Industry Business Activity Index (Service PMI) for January 2025, released on February 5th, was 51.0, which is 1.2 percentage points lower than December 2024 and the lowest since October 2024, but still maintains expansion. The previously released Caixin China Manufacturing PMI for January fell 0.4 percentage points to 50.1, also the lowest in nearly four months. The weakening of the prosperity of two major industries dragged down the Caixin China Composite PMI by 0.3 percentage points to 51.1 for the month. According to recent data released by the National Bureau of Statistics, the PMI for the manufacturing and service industries decreased by 1.0 percentage point and 1.7 percentage point respectively to 49.1 and 50.3 in January, with the former returning to the contraction range after a three-month hiatus; The comprehensive PMI output index is 50.1, 2.1 percentage points lower than December last year, with only slight expansion. Wang Zhe, senior economist at Caixin Think Tank, said that both the supply and demand of the manufacturing and service industries improved in January, but the overall price level was relatively low, especially the factory price of the manufacturing industry. The market is optimistic about the rebound, but it is still lower than the long-term average. According to the sub item data of Caixin China's service PMI, the expansion of supply and demand narrowed in January, and although the new order index for the month remained above the boom bust line, it marginally decreased. After a brief contraction in December 2024, the new export order index has once again expanded. The interviewed companies stated that foreign interest in China's service industry, including tourism, has increased, driving up the volume of new export business. The voluntary resignation of personnel combined with the continuous layoff and cost saving situation of enterprises has led to a contraction of employment in the service industry for two consecutive months, and the employment index in January fell to the lowest level since May 2024. Due to the slowdown in new order growth and the improvement of enterprise efficiency, the backlog workload index in January fell below the critical point. The increase in raw material prices and labor costs has driven the prices of inputs to continue rising in January, but the increase is limited; The sales price index slightly decreased within the expansion range. The optimistic expectations of service industry entrepreneurs have strengthened, and the business expectation index in January has steadily increased, but still remains below the long-term average. The sample companies stated that the launch of new business categories, increased business expansion efforts, and policy support will help boost sales in the coming year. But with the intensification of international competition, the prospects for international trade remain uncertain, which has also caused concerns for some companies. Wen Bin, Chief Economist of Minsheng Bank, told reporters that the January PMI data weakened compared to the end of last year and was weaker than seasonal factors, indicating that the economic recovery since the beginning of the year needs to be strengthened. After completing the economic and social development goals for the whole year of 2024 as scheduled, if we want to continue to maintain the momentum of economic stabilization and improvement, policies should take the initiative to push forward. Especially in the face of external uncertainty, policies to stabilize domestic demand need to be implemented as soon as possible. Wang Zhe believes that currently, there is insufficient effective demand in China, and residents' willingness to consume needs to be improved. Increasing residents' disposable income should be the focus of policy efforts. In addition, the number of newborns in 2024 is still at a low level, and relevant subsidy and incentive measures should be responded to as soon as possible. (New Society)