China’s manufacturing activity continues to expand, but economy facing headwinds in new year

Official manufacturing purchasing managers’ index (PMI) rose to 50.3 in December, up from 50.1 in November

The official non-manufacturing PMI, which measures business sentiment in the services and construction sectors, rose to 52.7 from 52.3 in November

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China’s official non-manufacturing purchasing managers’ index (PMI), which measures business sentiment in the services and construction sectors, rose to 52.7 in December from 52.3 in November. Photo: Bloomberg

Published: 9:07am, 31 Dec 2021Updated: 10:09am, 5 Jan 2022

China’s factory activity unexpectedly accelerated again in December, but the slender margin of growth highlights the headwinds that the economy is set to face at the start of the new year, with policymakers under pressure to offer more support measures.

The official manufacturing purchasing managers’ index (PMI) rose to 50.3 in December, up from 50.1 in November, data from the National Bureau of Statistics (NBS) on Friday showed. The figure was above the median forecast of a Bloomberg survey of analysts, which had predicted a slight fall to 50.

China’s factory activity had unexpectedly returned to expansion in November after seven months of decline, halting a run of two months of contraction, despite the overall economic slowdown in the second half of the year.

The figures of the coming quarter may be not good considering uncertainties brought by the pandemic outbreak in Xian and Omicron variant

Serena Zhou

“The figures of the coming quarter may be not good considering uncertainties brought by the pandemic outbreak in Xian and Omicron variant,” said Serena Zhou, a senior China economist at Mizuho Securities.

“However, potential government measures, including appropriate property-policy easing, bigger infrastructure spending and rate cuts, will provide certain support for the growth. 2022 will be a year for the Chinese economy to climb out of the trough.”

Within the official manufacturing PMI, a subindex for production in December fell to 51.4, down from 52 in November, while a subindex for new orders came in at 49.7, up from 49.4 in November.

But new export orders shrank further, with the subindex coming in at 48.1 compared with 48.5 a month earlier.

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