A private-sector survey released on Tuesday revealed that while China’s factory activity increased more quickly in December due to higher output improvements and new orders, business confidence for 2024 remained low.

At the end of 2023, the Caixin/S&P Global Manufacturing PMI increased to 50.8 from 50.7 in November, which was the strongest expansion in seven months and higher than experts’ projections of 50.4. Between growth and contraction, there is a 50-point threshold.

In 2023, the manufacturing sector experienced a decline in demand due to a number of causes including tightening consumer spending, geopolitical tensions, and a fall in the real estate market.

At the close of 2018, the senior authorities of China promised to modify policies to facilitate an economic rebound in 2024, but investors and markets are still waiting for additional stimulus packages to be announced.

The Caixin PMI was in opposition to official statistics that was made public on Sunday, which indicated that manufacturing activity shrank more quickly and than anticipated in December.

According to the Caixin poll, factory output increased in December at its fastest rate since May. Meanwhile, growth in new orders reached a 10-month high as a result of stronger demand and an increase in customer spending at the end of the year.

While several businesses reported an uptick in external demand from November, the rate of decline in new export orders decreased.

Although factory owners’ forecast for 2024 remained positive, their optimism declined from November and stayed below the long-run trend of the series.

Squeezed customer budgets, fierce rivalry, and worries about slowing markets were cited as the main issues.

A small rise in finished products inventories was caused in part by the delayed delivery of goods to customers. By year’s conclusion, input costs were still rising, but the rate of inflation had only marginally decreased to a four-month low.

Data was gathered between December 6 and 14, as stated by S&P Global.

Factory owners reduced payrolls for the fourth consecutive month and at the fastest rate since May due to lower-than-expected demand.

“The expansion of market supply and demand did not translate to an increase in hiring,” said Wang Zhe, economist at Caixin Insight Group, adding some surveyed firms said existing capacity was sufficient to handle additional orders under the current market condition.

“Looking to the new year, there is still room for adjustments in fiscal and monetary policies,” Wang said, calling for strengthened efforts in increasing employment to alleviate pressure on the job market.

(Adapted from SCMP.com)

Categories: Economy & Finance, Entrepreneurship, Geopolitics, Regulations & Legal, Strategy, Uncategorized