Explainer | China’s economic growth ‘will continue to regain vigour’: 4 takeaways from December’s manufacturing, services activity data

Official manufacturing purchasing managers’ index (PMI) remained in contraction in December, while the Caixin/S&P Global gauge rose again last month

Official non-manufacturing PMI rose, but the subindex for business activity in the services sector remained in contraction

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China’s official non-manufacturing purchasing managers’ index (PMI) rose in December, but the subindex for business activity in the services sector remained in contraction. Photo: EPA-EFE

Published: 12:00am, 5 Jan 2024Updated: 12:49am, 5 Jan 2024

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1. Headline reading down, but factory activity largely unchanged

China’s key factory activity gauge closed the year with a contraction for a third straight month, as December’s official manufacturing purchasing managers’ index (PMI) fell to 49 from November’s 49.4, hitting a six-month low.

The statistics bureau pointed to an “increasingly complicated, tough and uncertain” external environment as a key reason for the continued fall.

Zhao Qinghe, a statistician from the National Bureau of Statistics (NBS), said a reduction in overseas orders, as well as insufficient demand from the domestic market, were the major difficulties for firms last month.

Analysts at Goldman Sachs said that among the major subindices, the new orders subindex decreased the most, followed by the output subindex.

“The NBS commented that the decline in manufacturing PMI was linked to some raw materials industries entering the off-season period,” the analysts said.

In contrast, the Caixin/S&P Global manufacturing PMI rose to 50.8 in December from 50.7 in November.

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