Photo: Reuters
Photo: Reuters

Trade truce fails to revive China factories

China's manufacturing purchasing managers index drops to 49.4 in December, the weakest since early 2016 and below the 50 level that denotes contraction

Hong Kong/Beijing: China heads into the new year with its factories back in contractionary territory as the threat of a prolonged trade war dampens sentiment and stimulus struggles to gain traction.

The manufacturing purchasing managers index (PMI) dropped to 49.4 in December, the weakest since early 2016 and below the 50 level that denotes contraction.

Measures of new orders and new export orders slipped—a bearish signal for future demand—while readings for input and output prices weakened.

“The slowdown will continue into the next year," said Larry Hu, a Hong Kong-based economist at Macquarie Securities Ltd. “The weak PMI could result in more government stimulus to shore up the economy." There was some good news as the non-manufacturing PMI rose to 53.8 from 53.4. That suggests recent stimulus efforts may already be starting to have some effect.

Close