China: PMIs improved in December – UOB

Economist at UOB Group Ho Woei Chen, CFA, assesses the recently published PMIs in the Chinese economy.

Key Takeaways

“China’s official manufacturing and non-manufacturing Purchasing Manager’s Indexes (PMIs) improved and were both above consensus expectation in December. Improvement in the manufacturing outlook was also seen in the private sector Caixin manufacturing PMI.”

“Manufacturing outlook improved mainly due to easing raw material supply constraints but production and external demand weakened in December.”

“Non-manufacturing PMI rose in December after dipping in the two preceding months with services recovery offsetting seasonal weakness in construction. Domestic demand has remained fairly resilient despite outbreaks of COVID-19 in some cities.”   

“We remain of the view that China’s 4Q21 GDP growth could slow further to 3.5% y/y from 4.9% in 3Q21. For 2022, our growth forecast is at 5.7% with downside risk from the downturn in the domestic property market, virus resurgence and US-China tensions.”