China factory activity expands at slower pace in December

BEIJING (REUTERS) – China’s factory activity expanded in December but at a slower pace, as the country leads a pack of major economies emerging from the coronavirus slump.

The official manufacturing Purchasing Manager’s Index (PMI) fell to 51.9 in December from 52.1 in November, data from the National Bureau of Statistics (NBS) showed on Thursday (Dec 31), remaining above the 50-point mark that separates growth from contraction.

Analysts had expected it to fall slightly to 52.0.

China’s vast industrial sector has staged an impressive recovery from the coronavirus shock thanks to the surprisingly strong exports.

But tougher coronavirus control measures in many of its key trading partners in the West and recent domestic infections could dent industrial demand, weighing on the recovery.

The official PMI, which largely focuses on big and state-owned firms, showed the sub-index for new export orders stood at 51.3 in December, easing from 51.5 a month earlier.

Economic indicators ranging from trade to producer prices all suggest a further pick up in the industrial sector.

A sub-index for small business activity stood at 48.8 in December, sharply down from November’s 50.1 and returning to contractionary territory.

A sub-index for employment in the official PMI stood at 49.6 in December, slightly up from November’s 49.5.

The Chinese economy is expected to expand around 2 per cent for the full year – the weakest in over three decades but still much stronger than other major economies struggling to contain new infections.

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China has seen a strong improvement in retail sales driven by firm demand for autos and communication equipment.

In the services sector, activity expanded for the 10th straight month, albeit at a somewhat slower clip.

Ahead of China’s peak travel season, the capital Beijing imposed lockdowns on some Covid-infected areas, the first since the last coronavirus outbreak in the months of June and July.

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