HSBC China Manufacturing PMI

The HSBC Manufacturing PMI for the month of December was recorded at 48.7 compared to 47.7 in November, indicating a modest deterioration in manufacturing sector activities. This quarter the Index averaged its lowest quarterly reading since Q1 2009.

Companies reported an accumulation of stocks of finished goods for the first time in 17 months as the new business fell at faster rates relative to production.

The new orders reduction though eased compared to previous month, the rate of reduction was solid. Muted demand conditions have contributed to the decline in overall new business, moreover the new export business also fell during December, ending a two month growth period.

Average input costs faced by manufacturing firms decreased for the second successive month, mainly reflecting lower raw material prices. Despite easing from one month ago, the rate of reduction in average costs remained marked.

Commenting on the China Manufacturing PMI™ survey, Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC said: “While the pace of slowdown is stabilizing somewhat,weakening external demand is starting to bite. This, plus the ongoing property market corrections, adds to calls for more aggressive action on both fiscal and monetary fronts to stabilize growth and jobs, especially with prices easing rapidly. Hard landings should be avoided so long as easing measures filter through in the coming months.”

The CFLP China Manufacturing PMI

The Purchasing Managers Index by the China Federation of Logistics and Purchasing indicated a rebound in the manufacturing sector. The data was recorded at 50.3 in December as compared to 49 in the month of November. The rebound was mainly attributed to the seasonal factors, as manufacturers revamped production to meet the higher demand from festive season of Christmas and Chinese New year in the month of January.

The CFLP's PMI index is based on survey of Purchasing managers in more than 820 companies in 20 industries. HSBC PMI Index is based on survey of 400 manufacturing companies.