CHINA’S factory activity expanded at a quicker pace in December due to stronger gains in output and new orders, but business confidence for 2024 remained subdued, a private-sector survey showed yesterday.

The Caixin/S&P Global manufacturing PMI rose to 50.8 at the end of 2023 from 50.7 in November, marking the fastest expansion in seven months and surpassing analysts’ forecasts of 50.4.

A reading above 50 indicates expansion and anything below that points to contraction.

The Caixin PMI contrasted with official data released Sunday that showed manufacturing activity shrinking in December to the lowest level in six months.

The two surveys cover different sample sizes, geographic locations and types of businesses, and the Caixin survey results generally outperformed the official ones last year.

The better performance in the Caixin poll may suggest that small and medium sized businesses are doing “slightly better” than companies captured by the official survey, said Michelle Lam, greater China economist at Societe Generale SA.

The sprawling manufacturing sector came under pressure amid weak demand in 2023, with a property downturn, geopolitical factors and tight-fisted consumers all weighing on the post-pandemic recovery.

Chinese top leaders at the end of last year pledged to adjust policy to support an economic recovery in 2024, while markets and investors are waiting for more stimulus measures to be rolled out.

Factory output in December rose at the quickest pace since May, while growth in new orders hit a 10-month high thanks to firmer demand and a pickup in customer spending at the year-end, according to the Caixin survey.

New export orders fell at a slower pace as some firms reported an improvement in external demand from November.

The data were collected Dec. 6-14, according to S&P Global.

Amid weaker-than-expected demand, factory owners cut payrolls for the fourth straight month and at the quickest pace since May.

“The expansion of market supply and demand did not translate to an increase in hiring,” said Wang Zhe, economist at Caixin Insight Group, adding some surveyed firms said existing capacity was sufficient to handle additional orders under the current market condition.

“Looking to the new year, there is still room for adjustments in fiscal and monetary policies,” Wang said, calling for strengthened efforts in increasing employment to alleviate pressure on the job market.

In his annual new year address, President Xi Jinping pledged to strengthen economic momentum and job creation. Xi highlighted China’s manufacturing prowess during the address, mentioning a list of homegrown projects including the nation’s space programs and electric cars. (SD-Agencies)