China’s manufacturing PMI (49.4) fell slightly again in December 2022, as containment measures against covid-19 still had a high economic cost in that month. Compared to November, production decreased more moderately, mainly due to lower demand in the domestic and foreign markets and due to the temporary closure of some production facilities, while new orders fell more strongly. More importantly, expectations for future business have improved to the highest level since February 2022. Inventories of semi-finished products and finished orders have fallen, which is generally encouraging for future output growth. For the sixth consecutive month delivery times worsened, as Chinese companies prioritized foreign customers. On the other hand, the services have already risen from 46.7% to 48%, which means that the containment measures have had a less negative impact on the business of services in China. Optimism about business over the next 12 months strengthened to the highest level since July 2021, indicating that Chinese companies expect a renewed surge in domestic consumer demand.
Source: Caixin, S&P Global. You can read more articles from the Chief Economist of the GZS about the 1st week of 2023 in the Slovene language HERE.