China's official Dec PMI holds steady; in line with recovery – analysts

02 January 2013 07:10  [Source: ICIS news]

SINGAPORE (ICIS)--China’s official purchasing managers’ index (PMI) held steady at 50.6 in December last year, matching the previous month’s seven-month high, in line with the recovery in the country’s economy in the fourth quarter, analysts said on Wednesday.

A PMI reading at above 50 indicates expansion, while a reading below 50 means contraction.

“With the PMI above the 50 threshold for the third consecutive month, the data is in line with modest upturn in [China’s] economy in the fourth quarter of 2012,” Singapore-based UOB Economic-Treasury Research said.

The official PMI, released by the National Bureau of Statistics on 1 January, came after a similar survey by banking firm HSBC was released.

The HSBC PMI rose to 51.5 in December from 50.5 in November, signalling a modest improvement of operating conditions in the Chinese manufacturing sector, the bank said in its report on 31 December last year.

The bank’s December index reading was the highest since May 2011, it said.

“Output at manufacturing plants in China expanded in December, and for the second month in a row. Although the rate of expansion was modest, it was the fastest in 21 months,” HSBC said.

However, new export orders fell slightly following a modest increase in November, it added.

Looking ahead, China’s “cyclical rebound” is still expected to face strong headwinds, with economic and policy uncertainties in the US and the eurozone suggesting that external demand for Chinese exports will remain sluggish, analysts at ANZ Research said.

“[China’s] monetary policy will need to improve its effectiveness by lowering the funding costs of firms in order to support a sustained economic recovery,” they added.

By: Nurluqman Suratman

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