China’s factory activity bounced back in December, growing fastest in seven months, fueled by increased output and new orders.

The Caixin/S&P Global manufacturing PMI soar to 50.8 at the end of 2023 from 50.7 in November, marking the fastest expansion in seven months, surpassing the forecasts 50.4.

However, a glimmer of optimism doesn’t erase deeper concerns. Although new export orders dipped more slowly, business confidence dipped further from its long-run average. Tight consumer budgets, stiff competition, and sluggish markets weighed heavily on factory owners’ minds.

The December numbers contrast with official data showing a continued decline in manufacturing activity. This discrepancy highlights the uncertainty surrounding China’s economic recovery despite government pledges to boost growth in 2024.

Despite anxieties, December brought positive signs. Factory output surged, hitting its highest level since May, while new orders climbed to a 10-month high. Increased year-end demand and improving customer spending likely fueled this surge.