Chinese Manufacturing Sector Recovers In December

China’s manufacturing sector rebounded in December as firms signaled the strongest growth in output for a year amid a renewed uptick in total sales, survey results from IHS Markit showed on Tuesday.

The Caixin manufacturing Purchasing Managers’ Index rose to 50.9 in December from 49.9 in November. The reading was forecast to rise marginally to 50.0.

A reading above 50.0 indicates expansion in the sector. Although marginal, the rate of improvement was the strongest seen since June, the survey showed.

According to official survey from the National Bureau of Statistics, released over the weekend, the factory PMI climbed to 50.3 in December from 50.1 in November. The services PMI came in at 52.7, up from 52.3 in the previous month.

Output rose at the fastest rate for twelve months and solidly overall, supported by improved market conditions and stronger customer demand, IHS survey showed. New work rose for the third time in the past four months in December.

Employment decreased for the fifth month in a row, and at the fastest rate since February.

Purchasing activity also returned to growth at the end of the year. Though moderate, the upturn was the quickest seen since June. Meanwhile, stocks of inputs and finished goods rose slightly.

Average input costs rose at the weakest rate for 19 months in December, with the rate of inflation having fallen further from October’s recent peak. On the other hand, prices charged decreased for the first time since April 2020.

Business confidence remained strong overall in December but the degree of optimism slipped to a 20-month low.

“As policymakers said at the Central Economic Work Conference that China’s economic growth is facing triple pressures of “demand contraction, supply shock and weakening expectation,” stabilizing the economy will become the key priority of economic work in 2022,” Wang Zhe, a senior economist at Caixin Insight Group, said.

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