A recovery and surge in Chinese real narrow money from early 2015 suggested that economic momentum would begin to revive towards year-end, gathering strength in the first quarter of 2016. Negative commentary notwithstanding, December purchasing managers’ surveys are consistent with this scenario.

The new orders component of the official (NBS / CFLP ) manufacturing survey rose to 50.2 in December, slightly above the 50.0 average for the prior six months. Orders increased despite companies cutting finished goods inventories at a faster pace. The orders / inventories differential – a leading indicator – rose to its highest level since September 2014.

The new orders component of the official non-manufacturing survey, covering construction and services, increased more significantly last month, reaching its highest level since May 2014 – see chart. Stronger orders, again, were accompanied by a faster decline in inventories.

The Markit / Caixin manufacturing survey was notably weaker than its official counterpart, with the headline PMI slipping to 48.2 from 48.6 in November. This compares, however, with a September low of 47.2. The official survey should be more reliable, since it is based on a significantly larger sample (3000 versus 420). The lower level of the Markit / Caixin PMI may reflect a bias towards medium-sized and smaller companies: according to a size breakdown of the official survey, the PMI is highest for large companies (50.9 in December) and lowest for small firms (44.9).