The official Purchasing Managers’ Index (PMI) indicated while activity expanded, it was weaker than expected.
The softer start to the year is a contrast to a better than expected GDP growth of 6.9 per cent that brought the curtain down on 2017.
The National Bureau of Statistics’ PMI declined from 51.6 to 51.3, but above the 50-point level that divides growth from contraction.
However, the softer reading was broad-based with key measures of output, imports and new orders declining pointing to a weaker domestic economy.
Tighter credit controls to rein in debt, a weaker property market and falling export orders all took their toll.
The January figures were not impacted by the stiff tariffs slapped on Chinese solar panel and washing machines imports by US President Donald Trump last week.
Falling export orders a worry
Perhaps surprisingly given the pollution controls imposed during winter’s heating season, steel production rose sharply in January although it is still notably lower than the activity recorded in November.
Capital Economics’ Julian Evans-Pritchard said the export order index looked particularly weak.
“It fell to a 15-month low of 49.5, raising questions about the strength of foreign demand,” Mr Evans-Pritchard said.
“Meanwhile, the price indices point to a further easing of producer price inflation, which doesn’t bode well for industrial profit growth.”
Elsewhere, the non-manufacturing side of the economy appears to be holding up, expanding for a third consecutive month with a pick-up in service sector growth more than offsetting weaker construction activity.
“Looking ahead, some of the recent weakness in manufacturing may be partially reversed in the coming months as disruptions caused by the anti-pollution campaign fade,” Mr Evans-Pritchard said.
“But any rebound is likely to prove short-lived given that the drags on economic activity from slower credit growth and the cooling property market are set to intensify this year.”