China’s manufacturing sector showed a softer pace of growth in December, driven primarily by weaker foreign demand, according to the latest survey results from S&P Global.
The Caixin manufacturing Purchasing Managers’ Index (PMI) came in at 50.5 for December, a decline from 51.5 in November and lower than the expected 51.6. While the PMI indicates that the sector continued to expand for the third consecutive month, the pace of growth eased compared to the previous month.
Earlier official PMI data, released earlier this week, also pointed to a marginal expansion in December, with the index dropping slightly to 50.1 from 50.3 in November.
Manufacturing output continued to grow for the fourteenth month in a row, but the rate of expansion slowed due to a decline in new order growth. Despite this, the survey indicated that incoming new orders still rose for the third month in a row, although the pace of growth moderated due to weakening external demand.
Purchasing activity increased for the third consecutive month, with stocks of purchases also rising. The survey highlighted that some manufacturers were building safety stock in anticipation of potential disruptions.
Employment levels in the sector continued to decline, though the decrease in December was the smallest in the past four months.
In terms of pricing, average selling prices fell for the first time since September, marking a moderate decline. This was in contrast to an increase in input prices, with some manufacturers absorbing the higher costs by lowering their selling prices in an effort to boost sales. Export charges also saw a decrease in December.
Business confidence also softened at the end of the year, with manufacturers expressing the lowest optimism since September. Concerns over growth prospects and trade tensions, particularly around the impact of tariffs, led to a more cautious outlook for the year ahead.
Wang Zhe, senior economist at Caixin Insight Group, noted that the external environment for the sector is expected to be more complex in the coming year, calling for early policy preparation and responsive measures. He also emphasized the importance of focusing policy efforts on boosting household incomes and improving the spending power of disadvantaged groups.
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