China's Perceived Economic Activity Improves... Caixin PMI Hits Highest Level in 4 Months

Expansion Phase Continues for Two Months with 50.8 Record
President Xi Jinping Emphasizes Manufacturing in New Year's Address

An indicator reflecting China’s perceived economic conditions rose to its highest level in four months.

On the 2nd, Chinese economic media Caixin reported that the December Manufacturing Purchasing Managers’ Index (PMI), surveyed jointly with credit rating agency Standard & Poor’s (S&P), recorded 50.8, up 0.1 points from the previous month (50.7). The announced figure exceeded market expectations (50.4) and marked the highest level in four months. Prior to this, China’s National Bureau of Statistics announced on December 31 that the December manufacturing PMI was 49.0, down from 49.4 in November.

[Image source= Xinhua News Agency]

The Caixin manufacturing PMI is based on surveys of purchasing and HR managers at manufacturing companies. A result above 50 indicates economic expansion, while below 50 indicates contraction. It rose from 49.5 in October to 50.7 in November, showing an expansion phase, and the situation appears to have improved further last month.

Caixin explained, “Interviewed companies reported that new orders for consumer and intermediate goods increased in December, and the decline in investment sector orders slowed, indicating improved market demand,” adding, “External demand also slightly improved, and the new export orders index rebounded within the contraction range, reaching the highest level in six months.”

However, the employment sector remains in a cooling phase. Caixin noted, “In December, manufacturing employment pressure did not ease, with the employment index falling to its lowest level since June last year,” elaborating, “Companies remain cautious about hiring, failed to fill vacancies left by departing employees, and carried out restructuring due to weak demand.”

Wang Zhe, chief economist at Caixin think tank Zhuku, said, “Although manufacturing improved in December, domestic and external demand remain insufficient, and the foundation for economic recovery needs to be further strengthened,” advising, “The central government should introduce more policies that support stable growth.” He added, “There is still room for fiscal and monetary policy in the new year, and employment stability should be reinforced to effectively improve people’s livelihoods.”

Michelle Lam, China economist at Soci?t? G?n?rale, told Bloomberg, “The manufacturing sector’s recovery remains fragile,” explaining, “It shows somewhat better performance than the government’s official survey figures.”

Meanwhile, on the 31st of last month, Chinese President Xi Jinping delivered a New Year’s address at his Zhongnanhai office in Beijing, emphasizing China’s manufacturing capabilities and highlighting achievements such as spacecraft launches and growth in the electric vehicle market. He also stressed strengthening economic momentum and job creation.

This content was produced with the assistance of AI translation services.