China PMI: First fall in 12 months

Wednesday 23 Jan 2019

China Purchasing Managers Index (manufacturing) for December 2018 – In December 2018, the official China manufacturing purchasing managers index (PMI) fell below 50 for the first time in the past 12 months reflecting a slowing of manufacturing activity. An index of 50 is the threshold between positive and negative sentiment.

The press release from the National Bureau of Statistics mentions that PMI for medium and small sized enterprises were both below 50.


So on one hand:Many of the leading indicators for the Chinese economy continue to show weakness on both the export and domestic manufacturing front. Weakness in domestic demand has been much more pronounced than anticipated.

But on the other hand:
The Chinese government has in place measures aimed at boosting disposable income through tax adjustments. There has also been talk of incentives for SMEs to try and avoid job losses. On the international trade front it seems as if some import tariff will be lowered.

While many observers anticipate a protracted economic slowdown, judgements on the direction of the economy solely on the manufacturing PMI can be misleading as this does not include construction which is covered in the non- manufacturing PMI. China’s PMI for all sectors was still above 50 in December 2018 from 52.8 in the previous month.

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Source: ITTO TTM Report for January and National Bureau of Statistics of China

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