The manufacturing sector continued to expand and the economy showed signs of stabilizing

The caixin China manufacturing purchasing managers' index (PMI) for December 2019, released on January 2, stood at 51.5, continuing to stay above the line of expansion and contraction, with both new orders and production in expansion territory for six consecutive months. The previous day, the national bureau of statistics released the official manufacturing PMI of 50.2 percent, indicating that the manufacturing sector continued to expand, with market demand continuing to grow and production expansion continuing to accelerate. Industry pointed out that the leading indicators, whether from the overall view or small and medium-sized enterprises, the manufacturing sector has continued to expand, the recovery trend is more significant.

The official manufacturing PMI came in at 50.2 percent in December, the second straight month it has been above the line of expansion and contraction. Manufacturing is growing steadily. Zhao qinghe, a senior statistician at the service sector survey center of the national bureau of statistics, noted that production continues to accelerate and demand continues to expand. Manufacturing is more active on both sides of the supply and demand. The production index was 53.2%, up 0.6 percentage points from the previous month. Of the 21 sectors surveyed, 15 were in expansion territory. The new orders index was 51.2%, above the critical point for two consecutive months. In order to meet the production needs, the purchasing willingness of enterprises increased, and the purchasing volume index was 51.3%, up 0.3 percentage points month-on-month.

In addition, the import and export situation improved, foreign orders increased significantly, the import of raw materials continued to pick up. The index of new export orders came in at 50.3 per cent, up from 1.5 percentage points last month, rising to expansion territory for the first time since June 2018. The import index was 49.9%, up 0.1 percentage point from the previous month and up for two consecutive months. The supply and demand situation has also improved, the main raw material purchase price index and the factory gate price index both recovered.

Zhao qinghe also said that the transformation and upgrading continued to advance, emerging industries are growing well. The pmis of the high-tech manufacturing, equipment manufacturing and consumer goods sectors were 52.8%, 51.3% and 51.4%, respectively, higher than the overall manufacturing sector by 2.6, 1.1 and 1.2 percentage points, respectively.

The caixin PMI, mainly for small and medium-sized enterprises, also showed positive changes. Zhong zhengsheng, chairman and chief economist of monetta research, a caixin think tank, said the new orders index had been in expansion territory for six consecutive months. Manufacturers generally say this is related to increased customer Numbers, improved demand and new product launches. Because of the increase of new business, the production expansion is still fast. There was also a positive change in business sentiment, with the index of future output rebounding slightly in December. New product innovation, capital investment and corporate expansion plans underpin the industry's growth expectations.

Many institutions continue to be bullish on manufacturing and the economy. "The further improvement in the production index and the high level of new orders reflect the stable investment, improved consumer demand, the easing of uncertainty in the external environment and the easing of the destocking process, which all support business confidence." Shen wan hongyuan macro senior analyst qin tai pointed out.

"Both production and demand indicators performed well, and the margin strengthened the tendency of the economy to stabilize and pick up in the short term." Citic construction investment macro solid revenue chief analyst huang wentao thinks.

Li chao, chief macro researcher at huatai macro, also believes that the PMI continued to strengthen in November and December, indicating that the economy has shown signs of stabilization. Source: economic information daily

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