China Manufacturing Sector Confidence Stays High

The First Data on Economic Activity Levels in China - Every Month
The only survey with current month, month-on-month, monthly year-on-year, and forward looking questions
Updated: January 20, 2025

Business Confidence in the Chinese Manufacturing Sector has risen strongly in the last two months. In sharp contrast, Confidence in the Services sector, which has remained in reasonable shape during the long period during which the Manufacturing sector appeared to be hibernating, has recently become the laggard, with the January reading at a 24 month low.

Source: World Economics
Note: Data Shown as a Diffusion Index. (50 = 'No Change', above 50 = Increasing growth, below 50 = Declining growth)

It must be emphasized that not too much weight should be placed on a single data point from any individual economic index. Particular events, seasonality, problems with the data sample and many other factors can influence the results of a monthly panel survey. However, with both Manufacturing and Service Sectors Confidence Indicators now in positive territory, the outlook for the Chinese economy may conceivably be on the rise.

The Business Confidence Index is particularly important as the question asked of panel members relates to their confidence in the future course of business activity, not its present level. Sales Managers, because of the very nature of their work tend to be more attuned to the immediate future. They are in general very aware of levels of contracts they expect to be signed shortly, as well as current order books, with the potential personal impact of likely sales levels on bonuses linked to sales. Economists often refer to levels of Business Confidence as "animal spirits", reflecting the great importance of Confidence on future levels of investment and employment.

However the overall message regarding China must remain one of great caution, until more data points illuminate the likely course of economic activity in the first quarter of 2025. One particular hazard may significantly alter the short term outlook in China - the much heralded imposition of giant tariffs by the incoming Trump regime. In this context, the optimism evident in the Chinese Manufacturing sector is surprising. Preparations to batten down the hatches in case of stormy weather ahead might seem more appropriate advice. The big question remains: can the world's great growth engine of the past few decades move back towards its previously central role in sponsoring global economic expansion. Or will tariff wars with the USA and other factors move China and other centres of economic growth into reverse gear?

Sales Managers Index Components: All-Sectors

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About the Sales Managers Indexes

The Sales Managers' Indexes provide the earliest monthly data on the speed and direction of economic activity in key growth areas of the world.

The SMI’s (Sales Managers’ Indexes) are compiled and analysed by World Economics and are based on survey data collected from a panel of companies stratifying all Industry Classification Board (ICB) sectors which are weighted to reflect their contribution to national Gross Domestic Product.

Key advantages of the SMI's:

• The SMI's provide the first indication each month of the speed and direction of economic growth.
• The SMI's provide the most complete indication of growth, covering all private sector activity.
• The SMI's are based on a key occupational group - sales executives - uniquely able to sense accurate changes in business activity levels.
• The SMI survey base - salespeople - are used by virtually all businesses, including in frontier markets, unlike other occupational groups.
• The SMI's focus on the key countries contributing to over 60% of China growth in recent years.