China: PMIs point to improving momentum at year-end – ABN AMRO

Both manufacturing PMIs rose back to expansion territory in December. Both composite PMIs up for the first time since September. • Still more targeted support and piecemeal monetary easing expected this year, ABN AMRO's Senior Economist Arjen van Dijkhuizen reports.

China’s PMIs show first growth improvement since September

"Overall, China’s PMIs for December showed an improvement in growth momentum, the first general improvement in China’s PMIs since September. That was particularly true for the official PMIs published by NBS, while the alternative PMIs published by RatingDog also showed some improvement, albeit marginally. To start with manufacturing, the official PMI came in clearly stronger than expected, moving up by almost a full point to 50.1 (November/consensus: 49.2). RatingDog’s manufacturing PMI rose by 0.2 points, and also came out at 50.1 (November: 49.9, consensus: 49.8)."

"On the services side, the official survey also showed the largest improvement, with the non-manufacturing PMI rising by 0.7 points to 50.2 and moving back into expansion territory (November: 49.5, consensus: 49.6). This followed a remarkably drop in November, when this index fell below the neutral mark for the first time since China’s messy Zero-Covid exit end-2022. This improvement was driven by the construction sector, with the construction sub-index of the non-manufacturing PMI jumping by 3.2 points, to a 9-month high of 52.8. This is most likely the result of a filtering through of recent stimulus measures. Meanwhile, the official services sub-index improved marginally (to 49.7, from 49.5), staying just below the neutral mark."

"All in all, the December PMIs suggest some filtering through of recent support measures adding a bit to growth momentum. Going forward, we still expect Beijing to add further targeted fiscal support and piecemeal monetary easing to support domestic demand and safeguard overall growth this year, but not in the form of a massive support programme (‘credit bazooka’). As we concluded from the Central Economic Work Conference held in December, supporting domestic demand remains a key policy priority for 2026, but – not surprisingly given the sharp decline in fixed investment in 2H-2025 – with some shift in focus towards stabilising investment."