The government’s Purchasing Managers’ Index fell to 50.1 in December from 50.3 in November, according to data released by the statistics bureau and the China Federation of Logistics and Purchasing in Beijing. That compared with a median estimate of 50 in a Bloomberg News survey of analysts.
Investors’ expectations for more monetary easing have sent stocks soaring, with the Shanghai Composite Index registering its biggest annual gain since 2009. Weakness in the housing market is weighing on an economy that probably expanded last year at the slowest pace since 1990, according to economists surveyed by Bloomberg.
“The manufacturing industry faces relatively severe difficulties and pressure,” said Zhao Qinghe, a senior statistician at the bureau, in a statement.
Zhao cited reasons including weakness in export demand, falling prices at the factory gate, and China’s move toward a more services-led economy.
A separate manufacturing index released yesterday by HSBC Holdings Plc and Markit Economics also declined. The government’s manufacturing index was based on a survey of purchasing executives at 3,000 companies.
The Chinese economy grew 7.4% last year and the pace will cool to 7% this year, according to the survey. China’s benchmark stock index rose 53% last year, with most of the gain coming in the fourth quarter, when the central bank cut interest rates.
A services PMI rose to 54.1 in December from the previous month’s 53.9, according to a separate report from the NBS and the CFLP. Zhao said the “rapid growth” of services showed progress in changing the structure of the economy. Measures of employment fell for both manufacturing and services.