The Official NBS Manufacturing PMI in China fell to 49.4 in December 2018 from 50.0 in the previous month and below market consensus of 49.9. The latest reading pointed to the first contraction in factory activity since July 2016 amid declines in new orders (49.7 vs 50.4 in November), new export sales (46.6 vs 47.0) and employment (48.0 vs 48.3), and a slowdown in output growth (50.8 vs 51.9). On the price front, input prices slumped (44.8 vs 50.3) and output charges declined for the second month in a row (43.3 vs 46.4). Looking ahead, business sentiment softened further (52.7 vs 54.2). Business Confidence in China averaged 51.92 Index Points from 2005 until 2018, reaching an all time high of 59.20 Index Points in April of 2008 and a record low of 38.80 Index Points in November of 2008.
Business Confidence in China is expected to be 50.40 Index Points by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate Business Confidence in China to stand at 51.30 in 12 months time. In the long-term, the China NBS Manufacturing PMI is projected to trend around 51.00 Index Points in 2020, according to our econometric models.