China's December Caixin manufacturing PMI hits four-month high

Caixin China General Manufacturing Purchasing Managers' Index (PMI) clocked in at 50.8 in December, the highest level in four months, marking a steady climb following the country's emphasis on pro-growth measures.

A reading above 50 indicates expansion, while below 50 signals contraction.

The uptick from 50.7 in November was partly driven by a stronger rise in new orders, the most significant since February. The Caixin report attributed this to improved market conditions and increased client spending.

This translated to higher output levels, with manufacturers ramping up production for the second consecutive month, at the fastest pace in seven months.

Surveyed companies reported improved market demand in December, but businesses remained cautious over hiring. While the dip in new export orders continued, the decline softened to its slowest pace in six months.

Chinese manufacturers anticipate continued production growth in 2024, buoyed by forecasts of stronger global demand, higher client spending, and new product investments. However, their optimism compared to November has moderated slightly.

"Both supply and demand expanded as the market continued its upward trend, boosting production and sales," said Wang Zhe, senior economist at Caixin Insight Group.

China's policymakers called for active efforts to promote growth model transformation, structural adjustments, and quality and efficiency improvements to solidify the foundation for stable economic development at the annual Central Economic Work Conference in December.

Wang emphasized the need for continued policy adjustments in the new year to stabilize expectations, support job creation, and ultimately build long-term market confidence.

China's official manufacturing PMI, which surveys larger manufacturers, fell to 49 in December. 

Caixin data paints a brighter picture than official figures, suggesting effective policy support has buoyed confidence and activity in small and medium-sized manufacturers, Bruce Pang, chief economist and head of research at JLL Greater China, told CGTN.