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Dow Jones Newswires: China December Caixin manufacturing PMI slips further into contraction

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A private gauge of activity in China’s manufacturing sector was in contractionary territory for a fifth straight month in December, as waves of infections following Beijing’s abrupt reversal of its zero-COVID strategy last month disrupted businesses and dented demand.

The China Caixin manufacturing purchasing managers index dropped to 49.0 in December from 49.4 in November, according to data released Tuesday by Caixin Media Co. and S&P Global. The 50 mark separates expansion from contraction.

The subindexes for output and total new orders were below 50 for the fourth and fifth consecutive months, respectively, said Wang Zhe, senior economist at Caixin Insight Group.

The gauge for new export orders was in contraction for the fifth straight month, showing global demand for China’s goods continued to dwindle.

Employment continued to shrink for the ninth consecutive month, the worst performance since February 2020, when the pandemic started to hit China, reflecting sluggish hiring due to weak demand.

“Overall, the pandemic continued to take a toll on the economy in December. Supply contracted, total demand remained weak, overseas demand shrank, employment deteriorated, logistics was sluggish, manufacturers faced growing pressure on their profitability, and the quantity of purchases as well as inventories stayed low,” Wang said, adding that optimism significantly improved thanks to easing COVID-19 containment measures.

Tuesday’s data point in the same direction as China’s official manufacturing PMI, which fell more than expected, to 47.0, in December, the lowest level since February 2020.

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