China's Manufacturing Activity Expanded In December: Official PMI

By Bhaskar Prasad | December 31 2012 11:17 PM

China's manufacturing activity expanded in December for the third month in a row, giving the indication that the world’s second-largest economy is reviving its growth momentum.

REUTERS

Chinese 100 yuan banknotes are seen in this picture illustration taken in Shanghai January 17 , 2011.

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The data released Tuesday by the China Federation of Logistics & Purchasing showed that the Purchasing Managers' Index (PMI) remained unchanged at 50.6 in December from that in the previous month. Significantly, the index remained in the expansion zone, a reading above 50. The expansion of the manufacturing activity should allay the fears of a sharp retardation of the Chinese economy.

This report comes after it was revealed Monday that China's manufacturing activity expanded to a nineteen-month high in December, according to the HSBC PMI. The final reading of the HSBC PMI, a measure of the nationwide manufacturing activity, rose to 51.5 in December compared to 50.5 in November.

It was reported earlier this month that China’s industrial production rose in November in comparison with that in the previous month, indicating an upswing in the manufacturing output. The data released by the National Bureau of Statistics of China showed that the country’s industrial production, which measures the change in the total inflation-adjusted value of output produced by manufacturers, mines and utilities, rose 10.1 percent in November from 9.6 percent in October and more than the analysts’ expectation of 9.8 percent.

However, analysts are not fully optimistic about the revival of China’s growth as the global economic condition continues to be weak amid the debt crisis in the euro zone. China’s trade surplus dropped in November in comparison with that in the previous month, in an indication that soft global demand continues to weigh down on the economic growth.

According to the data released earlier this month by the National Bureau of Statistics of China, the country’s trade surplus shrank to $19.6 billion in November against $32 billion in October and below the analysts’ expectation of $25.7 billion.

The data by the National Bureau of Statistics of China showed last month that the country’s gross domestic product growth slowed to 7.4 percent in the third quarter, from 7.6 percent in the second quarter, due to the soft global demand and reduced real estate investment in the country.

Market participants hope that the policymakers will soon announce monetary easing measures so that the economy will continue to see that the industrial activities are picking up.