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January 4, 2017

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PMI expands at quickest pace in nearly 4 years

CHINA’S private sector saw manufacturing activities grow at the quickest pace in nearly four years in a sign of the economy warming up further.

Caixin China General Manufacturing PMI, slated toward private and export-oriented companies, rose to 51.9 in December from November’s 50.9 points, according to a survey by financial information service provider Markit and sponsored by Caixin Media.

A PMI figure above 50 marks an expansion of activity, and below 50 a contraction.

The December reading was the highest since January 2013, the survey said.

“The sub-indices for output and new orders both hit multi-year highs while those for input costs and output charges continued to rise rapidly, underlining sustained inflationary pressure,” Zhong Zhengsheng, director of macroeconmic analysis at CEBM Group, said. “The Chinese manufacturing economy continued to improve in December, with the majority of sub-indices looking optimistic.”

The rate of output growth accelerated to a 71-month high, backed by a sustained increase in new business during December.

Data indicated that improved domestic demand was the key driver of new business growth, while new export sales were flat in December, according to the survey.

The official PMI, released on Sunday with a focus on state-owned manufacturers, dipped to 51.4 in December from November’s 51.7.

It was the fifth consecutive month the PMI stayed in the expansion zone with the reading above 50.

Official data showed manufacturing activities, inflation, foreign trade, fixed-asset investment, and industrial production all rose in November.

Chen Zhongtao, analyst at the China Logistics Information Center, said in a Sunday statement that the growth in manufacturing activity may help China’s economy to grow 6.7 percent this year.

But stabilization of the country’s economy faces further risks ahead with Donald Trump’s administration threatening to slap China with heavy tariffs.


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