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China’s Manufacuring Expands, With Jobs Market Remaining Weak

Published 2022-01-03, 10:24 p/m
Updated 2022-01-03, 10:24 p/m
© Reuters.

© Reuters.

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China’s factory activity expanded in December as production and sales picked up, though employment remained weak, a private gauge showed Wednesday. 

The Caixin Manufacturing Purchasing Managers’ Index rose to 50.9 last month from November’s 49.9, Caixin and IHS Markit said in a statement Tuesday. Economists had expected a marginal improvement to 50, the dividing line between expansion and contraction. 

Output rose at the fastest pace in the past year, supported by improved market conditions and stronger customer demand, while inflation eased, according to the statement. Employment fell for the fifth month in a row, with the sub-index dropping to 48.7, the weakest since February last year. 

“Manufacturing demand and supply improved in December with easing inflationary pressure,” said Wang Zhe, a senior economist at Caixin Insight Group, which released the data. “But the job market was still under pressure and businesses were less optimistic, indicating unstable economic recovery.”

Total new orders increased as virus flare-ups were largely brought under control, while external demand was lackluster, according to the statement. Factory inflation eased from the peak, with the average input costs rising at the weakest rate for 19 months in December.

The findings are in line with official data released last week that showed a slight acceleration in the purchasing managers’ index from the previous month. The Caixin index surveys mainly smaller and private companies, while the official PMI mostly covers larger, state-owned enterprises. 

China’s economy is facing rising pressure on multiple fronts, with policy makers focusing efforts on stabilizing growth with “proactive” policies. The housing market is struggling, local government finances are being hit by weak land sales and there has been a series of recent Covid-19 outbreaks, including one which caused authorities to lock down the city of Xi’an. 

©2022 Bloomberg L.P.

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