China's manufacturing sector bounces back in December
China’s manufacturing sector bounced back in December, according to data released on Tuesday.
The Caixin manufacturing purchasing managers’ index rose to 50.9 from 49.9 in November, coming in above consensus expectations of 50.0, which is also the level that separates contraction from expansion.
The output component printed at 52.7 in December, up from 50.1 the month before, while the new orders index rose to 50.9 from 49.4. However, new export orders were little changed at 49.9 versus 49.8 in November.
Craig Botham, chief China+ economist at Pantheon Macroeconomics, said: "Inflationary pressures have eased further, following a very sharp drop in November which correctly predicted the pullback in PPI inflation.
"Input and output price subcomponents both fell in December, suggesting further declines in producer price inflation to come.
"The outperformance relative to the official PMI manufacturing suggests a regional divergence, with coastal provinces - and the private sector - seeing faster growth in December. But the opposite happened in November, when the official survey saw a strong rebound. For now, this looks more like catch-up than anything more fundamental."
Capital Economics said: "The latest surveys suggest that the pace of industrial growth picked up by more than expected last month. This was largely thanks to improving supply chain conditions and lower raw material prices. Meanwhile, services activity rebounded somewhat as containment measures were eased. But the PMIs suggest foreign demand is cooling.
"Taken together with problems in the property sector, this is set to weigh on industry. And China’s zero-COVID strategy will continue to hold back a further recovery in services."