Chinse Manufacturing Grows Unexpectedly Faster in December

  • Economic Indicators News
Chinse Manufacturing Grows Unexpectedly Faster in December

By Gina Lee – China’s factory activity grew at a faster pace in December, thanks to production hikes and easing price pressures. However, a weaker job market and business confidence is weighing on the market.

Data released earlier in the day showed that the Caixin manufacturing purchasing managers’ index (PMI) was 50.9 , the highest since June 2021 and above the 50-mark indicating growth. Forecasts prepared by predicted a 50 figure, whereas the index was at 49.9 in November.

Official data from the National Bureau of Statistics (NBS) released during the previous week showed that the manufacturing PMI was at 50.3 in December, up from the previous month’s reading of 50.1.

Governmental efforts to stabilize prices and increase supply, which eased price pressures for raw materials, contributed to faster factory activity.

However, the Caixin survey also showed a fall in both new export orders and a gauge for employment, which hit the lowest level since February of 2021.

"Supply was strong and demand rebounded. With the easing of supply constraints, output expanded for the second month in a row and at a faster pace. But the job market was still under pressure and businesses were less optimistic, indicating an unstable economic recovery. The repeated COVID-19 flare-ups and sluggish overseas demand were factors of instability,” Caixin Insight Group senior economist Wang Zhe told Reuters.

“Policymakers should focus on shoring up employment as well as on targeted support to small and midsize businesses,” Wang added.

Slower manufacturing growth, debt woes in the property sector, and sporadic COVID-19 outbreaks slowed down China’s economic recovery, after an initial strong start in 2020.

The People’s Bank of China has stated that it will maintain a flexible monetary policy in 2022 to stabilize growth and lower financing costs for businesses under economic headwinds.

On the COVID-19 front, various cities in China saw outbreaks. The eastern coastal province of Zhejiang saw a small-scale COVID-19 outbreak in December 2021, which has since subsided, but during which some firms were forced to suspend production. The northwestern city of Xi’an remains under a lockdown that began on Dec. 22, 2021, as an outbreak in the city continues.

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