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China’s PMI expands slowest in 3 months
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China’s manufacturing activity grew at the slowest pace in three months in December but it still ended above the average reading for the third quarter, a preliminary survey showed yesterday.
The HSBC Flash China Manufacturing Purchasing Managers’ Index, the earliest available indicator of industrial vitality, eased to 50.5 in December from November’s final index of 50.8, according to HSBC Holdings Plc and research firm Markit.
The slowdown was due to slowing growth of production and falling employment while expansion in new orders rose to a nine-month high, the survey said.
A reading above 50 signals expansion.
Qu Hongbin, chief economist for China at HSBC and co-head of its Asian Economic Research, said the latest PMI reflected that China’s growth recovery continued to be stable.
“The December flash PMI slows marginally from November’s final reading,” Qu said. “But it still stands above the average reading for the third quarter, implying that the recovering trend of the manufacturing sector from July is still holding up.”
Stable demand was the pillar propping up the manufacturing sector. The components showed that new orders rose to 51.8 in December from November’s 51.7 while new export orders edged up to 50.3 from 50.2.
But production dipped to 51.8 from 52.2 and the input price index fell sharply to 50.3 from 53, suggesting that deflationary pressure in the producer prices may persist.
But Zhang Zhiwei, an economist at Nomura, said the decline in the flash PMI indicated growth momentum has started to weaken.
“We believe this trend will continue in the first half of 2014, as market interest rates keep rising and pushing up financing costs for corporations,” Zhang said.
China’s economy was stable, rising 7.8 percent in the third quarter, up from 7.5 percent in the second quarter. Qu predicted economic growth of around 7.8 percent in the fourth quarter.
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