Standard Chartered reported an increase in activity in December.

The Small and Medium Enterprise Confidence Index (SMEI) recovered 0.2 points to 50.6 in December, with the average reading rebounding to above the 50-level in Q4. The services sector showed improvement, but remained weak. Manufacturing SMEs outperformed, with a solid month-over-month increase in sales and new orders. Credit conditions remained supportive for SMEs, and expectations of CNY depreciation increased further. The performance and expectations sub-indices for manufacturing SMEs rose to an eight-month high, with resilient sales, production, and new orders. The sales sub-index for cross-border trading SMEs also reached its highest level since April, indicating resilient external demand. Meanwhile, non-manufacturing SMEs’ activity remained soft, with sub-indices still in contractionary territory. The official non-manufacturing PMI is expected to ease 0.1 points to 49.9 in December. Overall, while there are signs of improvement, the SMEI remains cautious, with SMEs facing challenges in various sectors.