A survey of Chinese factory managers showed manufacturing contracted in December, the latest sign of continued weakness in the world’s second-largest economy.
BANGKOK — Manufacturing contracted in December, a survey of Chinese factory managers showed, in the latest sign that the world’s second-largest economy remains weak.
The Government Purchasing Managers Index (PMI) fell to 49 last month, the Office for National Statistics said on Sunday, in what officials said was evidence of weak demand. This was the third consecutive month of contraction. PMI is expressed on a scale of 100, with 50 marking the boundary between expansion and contraction.
The index has declined in eight of the past nine months, rising only in September. The index in November was 49.4, down from 49.5 the previous month.
Despite an unexpectedly prolonged slump following the pandemic, China’s economy grew at a pace of 5.2% in the first three quarters of this year, with signs of improvement in November as factory output and retail sales rose. showed that.
In recent months, the government has increased spending on ports and other infrastructure, lowered interest rates and eased curbs on home purchases to stimulate domestic demand that economists say is needed to sustain growth. .
President Xi Jinping said in his New Year’s speech that China had achieved a “smooth transition” from its response to the pandemic, sometimes involving the closure of parts or all of factories and cities.
In remarks carried by state news agency Xinhua, Xi said China’s economy is “more resilient and vibrant than before.”
Global demand for industrial goods has slumped as central banks around the world raised interest rates to combat the highest inflation in decades. Although price pressures have eased in recent months, demand has not yet recovered to pre-pandemic levels. The impact will ripple throughout the region, as supply chains linked to China are spread across many countries in Asia.
Stephen Innes of SPI Asset Management said in a comment that China’s reliance on exports to drive growth means increased competition as the Chinese government invests in building more industries. “The biggest constraint for manufacturing is not access to capital, but rather weak demand, so increasing investment in manufacturing mainly means expanding excess production capacity,” he said.
China’s non-manufacturing PMI rose to 50.4 in December, the Bureau of Statistics reported. However, the PMI sub-index for the services sector was 49.3, unchanged from November’s value.
Despite a slump in the housing market due to a crackdown on excessive borrowing by real estate developers, the construction industry is booming. According to the report, the sector’s sub-index rose to 56.9 in December, well into expansion territory from 55 in November. Said.