China’s manufacturing sector showed signs of recovery as December’s Purchasing Managers’ Index (PMI) indicated a rise, marking a notable shift in economic momentum. According to RatingDog, the new orders subcomponent of the manufacturing PMI increased by 2.4 points, reaching 51.0. Based on a scale between zero and 100, that is well above November’s 49.9 reading. That’s been a very positive development with the manufacturing PMI consensus forecast being below 50 at 49.8.
Additionally, the National Bureau of Statistics (NBS) released sharply higher official PMIs. In December, China’s manufacturing PMIs eked into expansion territory for the first time since September. According to analysts, the increase in the key manufacturing index means good news for the country’s economic health. This is a sign that the recent influx of supportive measures is beginning to have an effect.
Including the manufacturing PMI, the services sub-index ticked up slightly, rising to 49.7 from November’s 49.5. That increase is still shy of the neutral 50 mark. It’s a positive sign that the services sector is slowly rebounding. Particularly encouraging, both composite PMIs rose – the first increases since September – indicating an improvement in growth momentum across the board.
Perhaps even more encouraging was the fact that the construction sub-index within the non-manufacturing PMI surged by 3.2 points. It currently stands at a nine-month high of 52.8. This surge highlights renewed activity in the construction sector, which has been an essential driver of economic growth in China.
Economic experts consider such developments as harbingers or signs that an economic rebound is underway or soon to be realized. Arjen van Dijkhuizen emphasized that “all in all, the December PMIs suggest some filtering through of recent support measures adding a bit to growth momentum.” He noted, by all measures, progress has been made. He does look for more targeted fiscal support and gradual monetary easing to stimulate domestic demand, helping China achieve stabilizing growth as the economy finds a sustainable pace over the course of the year.
The official monthly survey congratulated the services sector with yet more good news. The non-manufacturing PMI jumped 0.7 points to 50.2, putting it back in the expansion zone! This change is remarkable because it points to the services sector beginning to recover after a long recession.