China factory activity edges up in December as commodity prices ease

BEIJING: Manufacturing activity in China edged up in December, official data showed Friday, beating expectations as the price of commodities eased and despite sporadic closures due to Covid outbreaks.

The Purchasing Managers’ Index (PMI), a key gauge of manufacturing activity, in the world’s second biggest economy rose to 50.3, remaining above the 50-point mark separating growth from contraction.

The data from the National Bureau of Statistics marks a slight increase from last month’s reading of 50.1 and beats expectations from analysts who had broadly predicted a slight decline.

“With the intensification of efforts to stabilise the economy, such as securing supply and stabilising prices… the prices of some commodities have fallen significantly, and the cost pressure on companies has eased,” NBS statistician Zhao Qinghe said.

Factory activity returned to expansion in November after seven months of decline due to power shortages and high raw material prices.

The PMI reading contracted below 50 for two months in September and October as the power crunch hit business operations.

Meanwhile, the non-manufacturing business activity index was 52.7 per cent in December, an increase of 0.4 percentage points from the previous month.

The recovery was driven in part by the recuperating air transport sector and hospitality.

Analysts have warned that China’s domestic coronavirus outbreaks will likely continue to weigh on the country’s economy, with sporadic outbreaks, including the ongoing lockdown in the city of Xi’an, hitting consumer confidence and shutting businesses.

The historic northern city of 13 million is a key destination for tourists.

A separate flare-up of cases in late October spread to 21 provinces and prompted sweeping travel restrictions and closures.

The NBS data also showed a 2.8 per cent decrease in the business activity index of the construction industry to 56.3 per cent, over Beijing’s deleveraging crackdown on the bloated property sector.

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