Chinese manufacturing ends 2021 on positive note

Goldman Sachs with the note:

Bottom line:

The NBS manufacturing PMI rose to 50.3 in December from 50.1 in November, likely due to restocking demand on the back of normalized raw material prices and policy easing. The output sub-index in the NBS manufacturing PMI survey fell in December, while the new orders sub-index increased. The NBS non-manufacturing PMI rose to 52.7 in December from 52.3 in November, entirely driven by the recovery of services sector.

Asia-MAP for official manufacturing PMI: +3 (3, +1)

3 out of 5 for relevance to growth

+1 on a scale of -5 to +5 for surprise relative to consensus

Key numbers:

China official NBS manufacturing PMI: 50.3 in December (GS forecast: 49.9; Bloomberg consensus: 50.0), vs. 50.1 in November.

Official non-manufacturing PMI: 52.7 in December (GS forecast: 52.1; Bloomberg consensus: 52.0), vs. 52.3 in November.

Main points:

1. The China NBS purchasing managers’ indexes (PMIs) survey suggested manufacturing activity growth accelerated in December, likely due to restocking demand on the back of normalized raw material prices and policy easing. The NBS manufacturing PMI headline index increased to 50.3 in December from 50.1 in November. Among major sub-indexes, the production index fell to 51.4 from 52.0, and the new orders sub-index rose to 49.7 from 49.4. The new export order sub-index fell to 48.1 in December vs. 48.5 in November, and the import sub-index edged up to 48.2 in December (vs. 48.1 in November).

2. The manufacturing employment sub-index increased to 49.1 in December (vs. 48.9 in November). The raw material inventories sub-index rose to 49.2 (vs. 47.7 in November), and the finished goods inventories sub-index rose to 48.5 from 47.9 in November. The suppliers’ delivery times sub-index edged up to 48.3 (vs. 48.2 in November), suggesting faster suppliers’ delivery.

3. Price indicators in the NBS manufacturing survey suggest inflationary pressures continued to ease in December – the input cost sub-index fell to 48.1 (vs. 52.9 in November), and the output prices sub-index fell to 45.5 (vs. 48.9 in November), both are the lowest level since last May. NBS mentioned both input cost and output price sub-indexes of petroleum, coking and other fuels, and smelting and pressing of ferrous metals were below 35. By enterprise size, the PMIs of large and medium enterprises both increased to 51.3 (vs. 50.2 and 51.2 in November), while the PMI of small enterprises fell to 46.5 (vs. 48.5 in November).

4. The official non-manufacturing PMI (comprised of the services and construction sectors) rose to 52.7 in December (vs. 52.3 in November), driven entirely by a recovery in services sectors – the services PMI rose to 52.0 (vs. 51.1 in November). According to the survey, the PMIs of producer services sectors (e.g. IT, finance and commercial services) were above 60 in December, and the PMIs of some high-contact consumer services rebounded to above 50, including airway, catering, culture, sports and entertainment.

5. The construction PMI fell in December to 56.3 (vs. 59.1 in November). NBS explained that the construction PMI fell largely due to cold weather and the coming holidays.

Unconventional Economist

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