China’s December factory activity growth misses expectations

Growth in China’s factory activity in December missed analysts’ expectations on Tuesday, signaling that Beijing’s stimulus measures were not enough to significantly boost the country’s ailing economy.

The country’s official purchasing managers’ index for December arrived in 50.1, data published by the Data from the Office for National Statistics demonstrated.

The reading missed Reuters expectations of 50.3. Manufacturing activity came in at 50.3 in November and 50.1 in October. A PMI reading above 50 indicates expansion of activity, while a figure below that indicates contraction.

Production and new orders for sectors including agriculture and food processing side, general equipment and food and drink increased, the Office for National Statistics said.

China’s non-manufacturing PMI, which measures activity in the service and construction industries, rose to 52.2 in December, compared to 50.0 the month before.

Of the 21 industries surveyed, 17 recorded higher activity than the month before, including aviation, transportation and telecommunications. The construction industry has also returned to expansion, boosted by the upcoming Spring Festival holiday.

“I think one of the reasons last month [when] we had a big swing in the non-manufacturing PMI, [it] it was partially because the construction PMI declined a lot,” said Tommy Xie, head of Asia macro research at OCBC.

Investors should also monitor the Caixin/S&P Global manufacturing purchasing index due for release on Thursday.

“For the Chinese economy, the year 2024 will be remembered as a year of confusion,” said Larry Hu, Macquarie Group’s chief economist in China.

“Deflationary pressures have persisted as the policy stimulus is just enough to reach the GDP target, but far from enough to boost the economy,” he added.

China’s economy has shown some recovery after a list of stimulus measures introduced by at the end of September.

“In general, we’ve always seen this [Chinese] the recovery is still ongoing,” Xie said. “China will achieve the growth target of about 5% for this year, maybe about 4.9%. So we see a small piece of recovery for 2024,” he added.

U The World Bank on Thursday raised its forecast for China’s economic growth 2024 and 2025, reflecting recent political adjustments. It now expects China’s GDP to grow by 4.9% in 2024 compared to its previous forecast of 4.8%, while in 2025.

However, other recent economic data from China indicate that the world’s second largest economy is still in disinflation, largely due to tepid consumer demand and a prolonged slump in the real estate market.

Consumer inflation in China fell to its lowest level in five months in November, while the the export and import figures of the country falling short of expectations. Also, the last one Retail sales data also disappointedReuters forecasts are missing.

China’s industrial profits declines extended to a fourth consecutive month, falling 7.3% in November from a year earlier.

Last week, China’s Ministry of Finance announced It will increase fiscal support next year to help stimulate consumption by expanding trade in consumer goods, increasing pensions and even health insurance subsidies for residents.

The Chinese authorities have also decided to issue 3 trillion yuan ($411 billion) in special treasury bonds next year — the largest amount on record — to boost fiscal stimulus efforts, according to Reuters.

China will face major challenges with Donald Trump in the White House. Trump’s threat impose higher fees on Chinese goods could also dent China’s export sector, which is already dealing with increased trade barriers from the European Union.