Official Manufacturing PMI in China fell to 49 points – This was announced by the National Bureau of Statistics on Sunday. That was weaker than the average forecast of 49.6 among economists polled by Bloomberg. According to the agency, the reading corresponded to the level of June. So it hasn't been this bad for half a year.
China. Economic activity fell
The activity rate in the service sector is of little consolation here. increased in December in November from 50.2 to 50.4. As the agency calculates – thanks to the expansion of the construction sector. All this is because the infrastructural investments made by the government have accelerated in recent months. Any reading above 50 indicates an expansion compared to the previous month, while a reading below this level indicates a recession.
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PMI data is provided Further signals of weakness in the Chinese economy at the end of the year. They are likely to put pressure on fiscal and monetary authorities and force them to take emergency measures. Middle Kingdom leaders are committed to maintaining a supportive attitude in 2024.
Europe is in stagnation
China's economic data is not good for the world. Stagnation may cause Europe's subsequent performance to remain low. In December, the Eurozone PMI for manufacturing stood at 44.2 points, the same as last month. Experts expected an increase.
– In December, the economic activity of the Eurozone decreased at a faster pace, The fourth quarter closed with the fastest decline in production in 11 years (if we exclude the pandemic months of 2022). The decline was observed in both the manufacturing and service sectors. Although both sectors experienced a deeper drop in new orders, which led to the depletion of manufacturing backlog. Employment fell for a second month in a row as companies cut production capacity in response to shrinking order books and a poor outlook for 2024, said S&P, which released the data.
We would like to remind you that the relations between Europe and China are becoming more and more tense in some aspects, and in others there are important dependencies. What happens in China's economy has a ricocheting effect on the old continent and the US.
how We described it in AugustChina has entered an era of slowdown, and the latest data seems to confirm it. – This will cause problems in other parts of the world – including Western Europe, where millions of jobs depend on the health of the Chinese market.. Germany is particularly vulnerable to the effects of infection – Dominik Kopinski from the Polish Economic Institute (PIE) told money.pl at that time.
Low domestic demand, decreasing imports
China's data may finally prompt the country's authorities to stimulate the economy. “The weaker-than-expected PMI data showed that economic growth continued to weaken amid the low season and winter weather,” Xing Zhaopeng, senior strategist at Australia & New Zealand Banking Group, explained in an interview with Bloomberg. “It is possible that the central bank will reduce the interest rates at the beginning of January,” he added.
NBS analyst Zhao Qinghe said the biggest problem some companies reported in the official PMI survey was “Falling foreign orders and insufficient domestic demand“.
Weak demand and declining consumer confidence are also reflected in deepening consumer price deflation and reduced imports. Moreover, analysts assume that the crisis in the real estate market will continue, which will further limit the demand for various types of goods – from furniture to household appliances.
This is confirmed by the index of new factory orders, which fell to 48.7 as a result of weakening demand. The measuring index of new export orders also decreased – to 45.8.
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