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Investing.com-- Chinese manufacturing activity grew past expectations in December, a private survey showed on Tuesday, as new orders clocked steady growth amid continued improvement in local and overseas demand for Chinese goods.
The Caixin Manufacturing Purchasing Managers Index (PMI) grew 50.8 in December, beating expectations for a reading of 50.4, and growing slightly from the 50.7 seen in the prior month. A reading above 50 indicates expansion, with the index now remaining in expansion for a second consecutive month.
The reading contrasted the results of a government survey released over the weekend, which showed that Chinese manufacturing activity remained in contraction through the final month of 2023. The official survey also showed that China’s manufacturing sector contracted in 2023, with an average of the past 12 months’ PMI data coming in at 49.8.
But the Caixin survey differs from the official reading in its scope of businesses covered- wherein it focuses more on smaller, private enterprises, as opposed to the bigger, state-run enterprises covered by the official survey. Investors use both surveys to get a broader picture of the Chinese economy.
While the Caixin reading indicated some signs of improvement in Chinese manufacturing activity, analysts noted that growth still remained largely modest. Cost pressures also remained muted, indicating that Chinese inflation saw little signs of improvement in the month.
“Overall, the economic outlook for the manufacturing sector continued to improve in December, with supply and demand expanding and price levels remaining stable. However, employment remained a significant challenge, and businesses expressed concerns about the future,” Wang Zhe, Senior Economist at Caixin Insight Group said in a note.
Zhe noted that there was still room for improvement in fiscal and monetary support policies from the Chinese government, and that supporting employment should be a key point of focus for policymakers.
A post-COVID economic rebound in China largely failed to materialize over the past year, as local businesses faced new headwinds from declining demand in their biggest export markets. This was exacerbated by Beijing remaining conservative in rolling out more fiscal support for the economy.
While the Chinese economy is still on track to meet a government growth target of 5% for 2023, markets remained cautious over growth picking up in 2024.