January updates on global factory activity released show the new year began much as the old one ended — with too much capacity chasing too little demand. Sonia Legg reports.

Video Transcript:

It may be a new year, but the economic outlook is much the same.

At least that's what January's surveys of global factory activity seem to be suggesting.

Like last year, there's too much capacity chasing too little demand.

And China is again disappointing: Manufacturing was at its lowest level since mid-2012.

Jan Randolph is Director of Sovereign Risk Analysis at IHS.

"What's happening in China is unique, it's transformative and it has a number of different impacts: commodities, growth elsewhere."

Stock markets, commodities and oil prices have all been battered by worries over China's economy.

And that's left central banks with an inflation problem.

Japan cut rates to negative last week as a result, and the ECB is expected to further cut next month.

Eurozone surveys offer nothing to suggest they should be changing course.

Markit's manufacturing PMI sank almost one point to two points above the growth mark of 50.

"Basically there is a broad recovery led by Germany, but also interestingly Spain — the laggard is still France. Italy moves backwards and forwards but is gaining some sort of traction. But overall there is a steady slow recovery in the works. This time it is more domestic rather than export-led," says Randolph.

January's weakness was partly because companies offered steep discounts on their goods.

But elsewhere there were some encouraging signs. Japan's factory barometer slipped only slightly with exports picking up.

And India recorded an unexpected return to growth after slumping in December.