Monday, December 31, 2012

China Manufacturing Expands to 19-Month High!

The HSBC China Manufacturing Purchasing Managers' Index, compiled by Markit, increased +1.0 to 51.5 in December, well above the 41-month low of 47.6 in August 2012. That was the lowest since March 2009.

This is the second consecutive month of expansion (greater than 50.0), after 12 consecutive months of contraction (less than 50.0) from November 2011 to October 2012. The China Manufacturing PMI has been just below 50 for 15 of the past 18 months.

China Manufacturing PMI by Month Manufacturing began contracting, an Index reading of less than 50, in July 2011. Manufacturing has now been expanding since October 2012. The chart peak was 55.3 in November 2010. The PMI is a percentage - not a total.

Hongbin Qu, Chief Economist, China Co-Head of Asian Economic Research at HSBC, said: "December’s final manufacturing PMI picked up for the fourth consecutive month to a 19 month high, thanks to the faster new business flows and the end of destocking. Such a momentum is likely to be sustained in the coming months when infrastructure construction runs into full speed and property market conditions stabilise. This, plus Beijing’s reiteration of keeping pro-growth policy in place into the coming year, should support a modest growth recovery of around 8.6% y-o-y in 2013, despite the ongoing external headwinds."

China Manufacturing PMI Moving Averages The short, intermediate, and long-term trends have reversed and are now rising. The PMI is a percentage - not a total.


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