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China’s factory activity slows in December 2023

China’s factory activity contracted to its lowest level in six months in December 2023, with the manufacturing purchasing managers index (PMI) falling to 49, signaling economic downturn and prompting expectations of government intervention. The decline, noted by the National Bureau of Statistics, was steeper than forecasted by Bloomberg economists. Non-manufacturing activity saw a marginal increase, driven by a surge in construction due to heightened government infrastructure spending. However, the service sector continued to contract. This weakening in China’s economic recovery towards year-end may pressurise policymakers to adopt stimulative fiscal and monetary measures. Challenges like falling overseas orders, weak domestic demand, and a persistent property downturn are hindering industrial sectors like textiles. Consumer sectors such as air transport and lodging are also slowing down due to reduced travel in colder weather.


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