Prime Highlights:
- China’s manufacturing activity expanded in December for the first time since March, signaling a recovery in factory production.
- Large enterprises led the growth, while overall demand and new orders showed positive momentum.
Key Facts:
- The official manufacturing PMI rose to 50.1, beating the expected 49.2 and indicating expansion.
- The broader composite PMI, covering both manufacturing and services, increased to 50.7, showing improvement across the economy.
Background:
China’s economy ended the year on a slightly brighter note as factory activity returned to growth in December, according to official data released Wednesday. The official manufacturing Purchasing Managers’ Index (PMI) rose to 50.1, surpassing the 49.2 forecast and marking the first expansion in the sector since March. A reading above 50 indicates growth.
The composite PMI rose to 50.7 in December from 49.7, showing the economy is improving. The non-manufacturing PMI, covering services and construction, also went up to 50.2, indicating growth beyond factories.
Huo Lihui, chief statistician at China’s National Bureau of Statistics, said that new orders increased in December, pointing to higher demand and production in manufacturing. Private-sector data showed the same trend, with research firm RatingDog reporting a manufacturing PMI of 50.1, above expectations.
Large companies led the rebound, with their PMI rising to 50.8, while medium and small firms remained under pressure. Medium-sized enterprises saw a modest increase to 49.8, whereas small enterprises dropped to 48.6. Experts suggest that while confidence for 2026 remains positive, it is slightly below historical averages.
Market reactions were mixed: Hong Kong’s Hang Seng index fell 0.83%, while mainland China’s CSI 300 gained 0.33%. The data comes amid ongoing challenges in the property sector and slower-than-expected retail sales, industrial output, and investment growth.
Hao Zhou, chief economist at Guotai Junan International, called the PMI reading a “positive surprise”, saying it shows the economy is on the right track and keeping steady momentum despite ongoing challenges.
China’s December data gives early signs that manufacturing and overall economic activity are stabilizing, providing cautious optimism as the country heads into the new year.
