China's Caixin Manufacturing PMI hits 4-month highs in December

China's Dec Caixin manufacturing PMI came at 51.5 vs 50.6 expected and 50.8 last, reflecting that the operating conditions improved at the quickest pace for four months.

Summary

The headline PMI pointed to a stronger improvement in Chinese manufacturing operating conditions at the end of 2017. Latest data highlighted faster growth of output, total new work and export sales. Greater production led to a further rise in buying activity, with the rate of growth quickening to a four-month high. At the same time, capacity pressures continued to build, with backlogs rising amid a further decline in workforce numbers (albeit marginal). Inflationary pressures remained elevated, with input costs rising sharply and prices charged increasing at a solid pace.

Optimism towards the business outlook picked up slightly from November’s joint-record low, but remained weak in the context of historical data.

The seasonally adjusted Purchasing Managers’ Index™ (PMI™) – a composite indicator designed to provide a single-figure snapshot of operating conditions in the manufacturing economy – posted 51.5 in December, up from 50.8 in November, to signal a further improvement in the health of the sector. Though modest, the rate of strengthening was the highest seen for four months.

Commenting on the China General Manufacturing PMI™ data, Dr. Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group said: “The Caixin China General Manufacturing Purchasing Managers’ Index rose to 51.5 in December, the highest since August. Stronger increases in both output and new orders were seen in December compared to the previous month. Growth in input prices eased to a four-month low, while growth in output prices slowed marginally. Stocks of finished goods shrank again in December, and stocks of purchases declined slightly”.