China’s manufacturing PMI fell to a six-month low in December

The decline was unexpected, analysts on average predicted a rise to 49.5 points

The Purchasing Managers’ Index (PMI) in China’s manufacturing industry amounted to 49 points in December 2023, up from 49.4 in November. This is according to the National Bureau of Statistics (NBS), Interfax-Ukraine reports.

In December, the PMI fell to a six-month low. The decline came as a surprise to analysts, who, according to Trading Economics, had on average predicted a rise to 49.5 points,

An index above 50 points indicates an increase in activity in the industrial sector, while a lower reading indicates a decline. The indicator remains below 50 for the third month in a row.

In December, the sub-index of new orders dropped to 48.7 points from 49.4 in November, export sales – to 45.8 points from 46.3, and the employment indicator – to 47.1 points against 48.1 in the previous month.

However, the indicator that measures optimism in the industry for the near future rose to 55.9 points in December, up from 55.8 in November. The PMI of services and construction increased to 50.4 points last month from 50.2 points in the previous month.

The composite PMI in December fell to 50.3 points from 50.4 in the previous month, the worst value since December 2022.

According to the Global Times, manufacturing activity in China remained in contraction in December, reflecting problems associated with insufficient demand. Analysts believe that as more measures are implemented to stimulate it, the situation may improve.

According to Zhao Qinghe, a representative of the NBS, the slight drop in the manufacturing PMI was influenced by factors such as the off-season for several categories of basic commodity industries.

As GMK Center reported earlier, blast furnace capacity utilization among 247 Chinese steelmakers fell to 81.59% between December 29 and January 4, reaching its lowest level in 15 months. Steel mills in the north of the country further reduced production amid cooling market activity. However, some plants in the eastern Chinese provinces of Jiangsu and Shandong, which had previously suspended production for annual overhauls, have completed the work and brought their facilities back online.