A Reuters poll showed that factory activity in China was likely to neither grow nor contract in December, hurt by production disruptions caused by a rebound in the coronavirus outbreak and a slowdown in economic momentum in the fourth quarter.
China's official manufacturing purchasing managers' index (PMI) is expected to contract to 50 in December, according to the median forecast of 24 economists polled by Reuters on Thursday (December 30). The November manufacturing PMI released by the National Bureau of Statistics of China was 50.1. PMI usually takes 50 as the dividing line, less than 50 means that the economy is contracting month-on-month, and higher than 50 is considered to be expanding the economy as a whole.
"We expect the NBS manufacturing PMI to come in at 49.9 in December, down from 50.1 in November," Goldman Sachs analysts said in a note this week.
"The Covid-19 outbreak in Zhejiang province since mid-December may have affected industrial activity, and container throughput data also showed that trade growth in December was weaker than in November," they said.
A small outbreak of the novel coronavirus, which broke out earlier this month in the wealthy Zhejiang province on China's eastern coast, has eased. Some companies have been forced to suspend production.
China, the world's second-largest economy, has rebounded strongly this year after being hit economically by the COVID-19 outbreak last year, but since the second half of the year, the economy has been slowed by a slowdown in manufacturing growth, property debt problems and occasional small-scale COVID-19 outbreaks. Growth loses momentum.
Analysts expect China's gross domestic product (GDP) growth to slow further in the fourth quarter.
The central Chinese city of Xi'an reported more than 100 new confirmed cases of the new crown on Thursday, making it the city with the most non-imported cases of the virus this year of any Chinese city.
Two of the world's largest chipmakers, Samsung Electronics and Micron Technology, have warned that Xi'an's lockdown could affect their chip production in that region.
Profit growth at Chinese industrial companies slowed in November due to falling prices for some raw materials, a slump in the property market and weakening consumer demand, China's statistics bureau said on Monday.
China's official manufacturing PMI and non-manufacturing PMI will be released on Friday, with the former focusing on large state-owned enterprises and the latter counting services. China's private sector Caixin will release its Caixin Manufacturing Purchasing Managers Index on January 4.