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The official China PMIs for December showed an improvement in activity with both manufacturing and non-manufacturing returning to growth. The composite PMI rose to 50.7 from 49.7, which had been the first move below the breakeven 50-level since December 2022. 

• The manufacturing PMI improved to 50.1 up from 49.2 and higher than expected. While one month doesn’t make a trend, December may signal the end of the contraction in activity in the sector that began in April. Confidence in the outlook picked up to 55.5 from 53.1.
• The recovery was driven by higher output but also new orders which returned to positive territory at 50.8. Orders growth was driven by the domestic economy with export orders continuing to contract but at a slower pace than most of the year.
• The outcome was confirmed by the RatingDog December manufacturing PMI at 50.1 up from 49.9.
• Non-manufacturing also shifted slightly into growth territory at 50.2 from 49.5, which was also stronger than consensus. Most components continued to contract though but at a slower pace than last month but expectations were very positive at 56.5. New orders remained weak at 47.3 but up from 45.7, while export orders deteriorated to 47.5 from 47.9.
• Manufacturing and non-manufacturing selling prices continued to decline in December despite positive input cost inflation. This signals that China’s inflation rate is likely to remain close to zero. 

• CHINA DEC RATINGDOG MANUFACTURING PMI 50.1 VS 49.9 IN NOV

• **CHINA DEC MANUFACTURING PMI 50.1 VS 49.2 IN NOV