China's private sector experienced growth towards the end of the year, driven by fiscal stimulus and a relaxed monetary policy, according to reports released on Tuesday. The official data from the National Bureau of Statistics indicated a slight decrease in the manufacturing Purchasing Managers' Index (PMI), falling to 50.1 in December from 50.3 in November. Despite expectations for the index to remain steady at 50.3, it has sustained above the crucial 50.0 mark for the third month in a row, indicating ongoing expansion within the manufacturing sector.
In contrast, the non-manufacturing PMI exceeded forecasts by climbing to 52.2, up from 50.0 in the previous month. Experts had anticipated a modest increase to 50.2. Consequently, the official composite PMI rose to 52.2, an improvement from November's 50.8.
Gabriel Ng, an economist at Capital Economics, commented that accelerated growth in the services and construction sectors fueled the economy's momentum in December. Ng highlighted that increased fiscal support is expected to continue bolstering economic growth, particularly with deficit spending likely to be emphasized at the beginning of 2025. However, he cautioned that this boost might only be transient, as potential tariff threats could be realized and ongoing structural imbalances remain a challenge for the economy.
