The ongoing COVID-19 disruptions continue to affect different parts of the world and have the potential to drive regional disparities. Alongside the renewal of the case growth towards the closing months of 2021, we observe increasing concerns about the COVID-19 Omicron variant causing the growth momentum to slow. China's manufacturing PMI barely held steady in the expansionary region in December, showing that the industrial sector is struggling to stay stable. The purchasing managers index (PMI) for China's manufacturing sector rose more-than-expected to 50.3 in December from 50.1 in November. Services PMI, on the other hand, rose to 52.7 in the reported month from November's reading of 52.3 and against expectations of 53.1.
If we look at the sub-items; Production and export orders decreased, while new orders, raw material stocks and employment increased. The manufacturing sector appears to have continued to benefit from strong exports and easing power outages, as coal supplies have increased since November. The non-manufacturing PMI faces some downside pressure, reflecting the headwinds facing the services sector, but remains broadly at the same time. The weakness seen in retail sales, especially in service items, in November, continued until December due to the Covid-19 outbreak that started in mid-October.
When we look at the price indicators; Input prices decreased from 52.9 to 48.1 (entering the regression zone), while output prices decreased from 48.9 to 45.5. It is positive that we are seeing signs of easing inflationary pressures. The decline in input prices, which brings the actual cost pressure rather than the output price, is important here. We'll see if it's permanent. In terms of the supply of goods in the market, the supply problems should be alleviated and the inventory turnover rate should increase.
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