As COVID-19 outbreaks continued to weigh on both output and demand, China’s manufacturing activity contracted for a fifth straight month in December.
The Caixin China General Manufacturing Purchasing Managers’ Index declined to 49 in December from 49.4 in November.
Anything below the 50-point marks contraction; on the contrary, anything above 50 marks growth.
“The drop came as COVID-19 outbreaks continued to weigh on manufacturing activity,” Wang Zhe, senior economist at Caixin Insight Group was quoted as saying.
“Both manufacturing supply and demand continued to shrink last month,” Wang added.
Due to the sluggish global economy and weakening overseas demand, the gauge for new export orders also remained in contraction territory for the fifth straight month in December.
Caixin data showed subindexes for output and new orders stayed in the contraction territory for the fourth and fifth straight month, respectively, in December.
“In the short term, COVID infections are expected to explode (in China), which will severely impact production and life order. How to effectively coordinate COVID controls with economic and social development has once again become the top priority,” Wang said.
However, optimism improved significantly among businesses. The reading for manufacturers’ expectations for future output reached the highest since February, and firms expressed strong confidence in economic recovery following the easing of COVID containment measures, according to Caixin.
“Policymakers have made it clear that priority must be given to the recovery and expansion of domestic consumption, which requires improving social expectations and confidence as well as more efforts to stabilize the job market and effectively increase the disposable income of residents,” Wang remarked.
