Chinese manufacturing production increased slightly at the end of 2018, after stagnating in the prior two months. However, there were signs of softer demand conditions, as total new orders fell marginally, and companies reduced their output charges for the second month running. The latter was supported by the first drop in input costs for just over a year-and-ahalf. Looking ahead, business confidence was relatively subdued, and companies reduced their headcounts for the sixty-second month running.

The headline seasonally adjusted Purchasing Managers’ Index figure snapshot of operating conditions in the manufacturing economy fell from 50.2 in November to 49.7 at the end of 2018, to signal a renewed deterioration in overall operating conditions. Though only slight, it was the first time that the health of the sector worsened since May 2017. After stagnating in the prior two months, production rose slightly during December. Notably, the rate of expansion was much softer than those seen earlier in 2018.