BEIJING (Reuters – China’s factory activities grew at their fastest pace for six months in December. This was driven by higher production and easing prices, but a weaker labor market and increased business confidence created uncertainty.

Caixin/Markit Manufacturing Purchasing managers’ index (PMI), reached 50.9 in December. This is its highest level since June. A Reuters poll showed that economists expected the index’s rise to 50.0. This is the monthly measure of growth and contraction. It was 49 in November.

According to an official survey, released Friday that showed China’s manufacturing activity had edged upwards, the relative strength of Caixin PMI matches.

Private survey shows that factories produced more than usual in the past year. The reason for this was lower price pressures. An indicator of input costs fell to their lowest level since May 2020.

Recent government initiatives to stabilize and increase supplies have helped lower the impact of rising raw material prices on manufacturers.

The survey showed that new orders for export fell at a slower rate and that a gauge of employment contracted, reaching its lowest point since February.

Demand rebounded and supply was strong. “With the release of supply constraints, output increased for the second straight month at a faster rate,” stated Wang Zhe from CaixinInsight Group.

However, the jobs market was under stress and companies were more optimistic. This indicates an unstable economic recovery. Stability was caused by the Covid-19 flareups that kept popping up repeatedly and slow foreign demand.

After rebounding from the pandemic slump last year, the world’s second largest economy lost its momentum in the summer. This was due to a slower manufacturing sector and debt problems in property markets. Small-scale COVID-19 epidemics have also weighed on the economy.

Analysts anticipate a slowing of fourth-quarter gross domestic products (GDP) after July and September’s growth of 4.9%.

In December, the wealthy Zhejiang Province on China’s Eastern Coast was hit by a COVID-19 small-scale outbreak. However, some businesses were forced to cease production.

As a result of a continuing outbreak in northwest China’s city of 13 million, the security of Xian (the industrial and tech center of Xian) has been tightened.

A crackdown on property sectors and debt crises among major real estate developers this year have both hurt an important industry for China’s economic growth.

In an effort to balance growth, stabilize the economy and decrease financing costs in the face of economic uncertainty, the central banking has stated it will maintain a flexible monetary policy next year.

Wang stated that policymakers need to focus not only on increasing employment but also on providing targeted assistance for small and medium-sized businesses.