Caixin OnlineFinance & EconomicsTop Stories Finance Manufacturing Shrinks for 10th Straight Month, as Caixin China PMI Stands at 48.2
01.04.2016 09:45

Manufacturing Shrinks for 10th Straight Month, as Caixin China PMI Stands at 48.2

Output category slips for seventh time in eight months, and new export orders also fell off for the first time in three months
By staff reporter Wang Yuqian

(Beijing) – Chinese manufacturers saw their operating conditions deteriorate for the 10th straight month, as the Caixin China Purchasing Managers' Index for December came in at 48.2.

The figure shows that manufacturing shrank from November, when the PMI figure was 48.6.

The further a PMI number is away from the neutral 50-point level, the more the industry has contracted or expanded.

Data for the categories used to calculate the index show that it fell mainly because of a renewed shrinking of manufacturing output. December marked the seventh month in eight that production has fallen. Total new businesses weakened further, with softer demand at home and abroad. New export orders fell for the first time in three months.

Manufacturers continued to shed workers and cut their purchasing activities in line with lower production requirements. Deflationary pressures persisted, as their input costs and sales prices both fell.

December's manufacturing PMI shows that "the forces driving an economic recovery have encountered obstacles and the economy is facing a greater risk of weakening," Dr. He Fan, chief economist of Caixin Insight Group, said.

"More fluctuations in global markets are expected now that the U.S. Federal Reserve has started raising interest rates," he said. "The government needs to pay more attention to external risk factors in the short term and fine-tune macroeconomic policies accordingly so the economy does not fall off a cliff.

"It needs to simultaneously push forward the supply-side reform to release its potential and reap the benefits."

The Caixin China PMI for the services sector will be published January 6.

Sign up to receive our free daily newsletter