A private indicator of China's economy just came in better than expected

  • Caixin/IHS Markit releases its China January manufacturing PMI reading
  • That metric focuses on smaller businesses in China compared to the official PMI reading, which was released on Monday
Workers assemble televisions on the production line of Tianle Group Co., Ltd on July 3, 2012 in Shengzhou of Zhejiang Province, China.
Feng Li | Getty Images
Workers assemble televisions on the production line of Tianle Group Co., Ltd on July 3, 2012 in Shengzhou of Zhejiang Province, China.

A survey focused on small and mid-size manufacturing in China beat expectations on Thursday as factory output hit a 13-month high.

The Caixin/Markit manufacturing Purchasing Managers' Index for January came in at 51.5.

Economists polled by Reuters expected the private Caixin/Markit PMI to come in at 51.3 in January versus 51.5 in December.

A reading above 50 indicates expansion, while a reading below that signals contraction.

Growth was supported by increases in total new work and new export sales, Caixin and Markit said in a joint press release.

Even though sub-indices reflect improving conditions in output, overall new business and new export orders increased at a slower pace than a month ago, pointing to moderating demand, said Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group, a subsidiary of Caixin.

The Caixin/Markit survey focuses on small and mid-size businesses in China and comes after the world's second-largest economy reported official January manufacturing PMI on Wednesday that hit an eight-month low.

The official manufacturing Purchasing Managers' Index for the month missed expectations, coming in at 51.3.

China's economy surprised on the upside in 2017, but economists expect a managed slowdown this year to hit growth.

The Chinese government is cracking down on high debt levels and heavily polluting industries while engineering a transition toward a services and consumption-led economy.

"The manufacturing industry had a good start to 2018. Going forward, we should keep a close eye on the stability of the demand side," Zhong added in the press release.

The official non-manufacturing PMI released on Wednesday expanded to 55.3 in January from 55 in December.

Caixin/Markit is set to release its China services PMI reading for January next Monday.