China's manufacturing activity grows in December at fastest pace in 4 months

Caixin China General Manufacturing Purchase Managers' Index rises to a four-month high of 51.5 for December from November's 50.8.

China’s manufacturing activity expanded in December at the quickest pace in four months to confirm steady economic growth in 2017, a private report showed today.

The Caixin China General Manufacturing Purchase Managers' Index rose to a four-month high of 51.5 for December from November’s 50.8, according to the survey conducted by financial information service provider Markit and sponsored by Caixin Media Co Ltd.

A reading above 50 indicates expansion, while a reading below reflects contraction.

An increase in production led to higher purchasing activity, with the rate of growth accelerating to a four-month high.

At the same time, capacity pressures continued to build, with backlogs rising as workforce numbers declined further, the report said.

Sub-indices showed that input prices eased to a four-month low, while growth in output prices slowed marginally.

“Manufacturing operating conditions improved in December, reinforcing the notion that economic growth has stabilized in 2017 and has even performed better than expected,” Zhong Zhengsheng, director of macroeconomic analysis at CEBM Group, said.

However, Zhong warned that growth this year may face downward pressure due to the government's tightening monetary policy and strengthening oversight on local government financing.

Released last week, the official PMI in December dipped to 51.6 from November’s 51.8.

The average reading for the past year was 51.6, the highest in seven years.

Divergence of the official data from Caixin data is common as the official manufacturing PMI survey covers 3,000 large and small companies, while the Caixin PMI measures 500 small and medium sized businesses.

The Bank of Communications in a report said the December official PMI showed China’s domestic demand weakened but global economic recovery helped sustain exports.

BoCom economists said they expected China’s economic growth to ease this year as slower investment growth would offset continued recovery of exports and consumption.

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