China’s manufacturing activity expanded in December, a private survey shows

China’s manufacturing activity expanded in December, a private survey shows

Workers producing clothes in a factory in Huaibei, China.

STR | AFP | Getty Images

A private survey released on Thursday showed China’s manufacturing activity expanded in the month of December.

The Markit/Caixin Purchasing Managers’ Index (PMI) for manufacturing came in at 51.5, compared to 51.8 in November.

Analysts polled by Reuters had expected the private manufacturing PMI to come in at 51.7 for December.

PMI readings above 50 indicate expansion, while those below that level signal contraction.

IHS Markit and Caixin said in a press release that domestic demand expanded in December, but the pace of expansion was slower than in October and November. There was also an improvement in business sentiment, they said.

On Tuesday, China released official manufacturing PMI for December that was slightly above expectations at 50.2, data from the country’s statistics bureau showed.

Investors are keeping a close watch on the health of China’s economy amid a long-drawn trade conflict between the U.S. and China which has weighed on sentiment.

The official PMI survey typically polls a large proportion of big businesses and state-owned enterprises. The Markit/Caixin survey features a bigger mix of small- and medium-sized firms.

On December 13, the U.S. and China announced they had reached a phase one trade deal including some tariff relief, increased agricultural purchases and structural change to intellectual property and technology issues. U.S. President Donald Trump has said he will be signing the phase one deal with China at the White House on Jan. 15.

“Subdued business confidence was a major factor behind the economic slowdown this year,” said Zhengsheng Zhong, director of macroeconomic analysis at Caixin subsidiary CEBM Group. “As the phase one trade deal between China and the U.S. has sent out positive signals, there is room for a recovery in business confidence, which should be able to help stabilize the economy.”

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