Manufacturing activities in China witnessed a sharp decline in December 2022, according to the official data released by China’s national bureau for statistics (NBS). The Purchasing Managers’ Index (PMI) recorded in December 2022 was down to 47, compared to 48 recorded in the previous month. China marked the downfall for the third month in a row.
China’s sudden relaxation on its zero-Covid policy, followed by the rapid spread of COVID-19, has hurt the nation’s overall production. The PMI is a fundamental measure in the world’s second-biggest economy, and a recording below 50 indicates a downturn in factory activities. NBS obtains the PMI from a survey of large-scale and state-owned companies.
Since February 2020, China did not see such a steep contraction in manufacturing activities. The rapidly plunging output (December vs November) was 44.6 vs 47.8. While new orders received were 43.9, and export sales were 44.2 vs 46.7.
Purchasing activity declined for the third time in a row, and the employment rate has decreased sharply. With the most profound fall in the last eight months, the buying activity was 44.9 vs 47.1, and the employment rate was 44.8 vs 47.4.
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The input cost rose steeply for the fourth month of running, while the output charges lengthened for the eighth successive month. Furthermore, delivery time grew significantly.
However, the fact remains that the PMI has not contracted up to this extent in nearly three years. While this is concerning, Trading Economics predicted the business confidence (PMI) as 49.5 by the end of this quarter.
The average PMI of China is 51.45 from 2005 to 2022. It peaked in April 2008 at 59.2 points and recorded its lowest at 35.7 in February 2020. According to the global macro model and analysts’ anticipations, the PMI might trend around 52 points in 2023 and 51 in 2024.
(With inputs from agencies)
