An employee works on the production line of power batteries and box chassis for new energy vehicles at a workshop on July 11, 2025 in Huaibei, Anhui Province of China.
Li Xin | Visual China Group | Getty Images
China's economy ended the year on a slightly less gloomy note, as factory activity expanded in December for the first time since March, beating expectations, according to official data released Wednesday.
The official manufacturing purchasing managers index rose to 50.1 in December, above the 49.2 forecast by economists polled by Reuters, and higher than 49.2 in November. A reading above 50 indicates expansion.
The composite PMI, a broader measure that tracks activity across manufacturing and services, climbed to 50.7 from 49.7 in November, pointing to broader improvement across the economy.
China's non-manufacturing PMI, which covers services and construction, increased to 50.2 from 49.5 in November.
Huo Lihui, chief statistician from China's National Bureau of Statistics, said that new orders rose in December, signaling a "significant expansion" in both production and demand in manufacturing.
Private-sector data showed a similar trend. A separate PMI from independent research firm RatingDog showed manufacturing activity rising to 50.1 from 49.9, beating expectations of 49.8.
Yao Yu, founder at RatingDog, said the reading indicated the manufacturing sector had returned to expansion. He noted that total new orders grew for a seventh consecutive month, supported by domestic new product launches and business development, leading to growth in production.
However, Yao said that while firms remain confident for 2026, optimism has eased and remained below the historical average.
Large enterprises drove the improvement, with their PMI rising to 50.8, up 1.5 percentage points from the previous month, data from China's National Bureau of Statistics showed.
Activity among smaller firms remained weaker. The PMI for medium-sized enterprises rose to 49.8, while the index for small enterprises fell to 48.6, down 0.5 percentage points from November.
Markets were mixed after the release. Hong Kong's Hang Seng index fell 0.83%, while the mainland's CSI 300 rose 0.33%.
The data followed a decision by China's central bank earlier this week to keep loan prime rates unchanged, despite weak economic data and an extended slump in the property sector plaguing the world's second-largest economy.
November's retail sales and industrial output missed expectations, while investment in fixed assets also contracted.
Hao Zhou, chief economist at securities company Guotai Junan International, told CNBC's "Squawk Box Asia" Wednesday that the reading was a "very good, positive surprise to the market."
"Maybe the market is concerned about China's property market, China stock market, as well as the consumption," Zhou said. "The data for now suggests that the economy is on the right trend, and the momentum remains solid."
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