China’s factory output expected to expand in December, Latest Business News - The New Paper

China’s factory output expected to expand in December

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BEIJING : China's factory activity likely expanded again in December on stronger external demand and an infrastructure push at home, but the pace of growth is set to ease as markets await more certainty on a US-China trade truce, a Reuters poll showed.

The official Purchasing Managers' Index (PMI) for December is expected to come in at 50.1, slightly above the 50-point mark that separates expansion from contraction on a monthly basis, according to the median forecasts of 27 economists.

This would be notch below November's 50.2, which unexpectedly ended six straight months of contraction as Beijing's accelerated stimulus measures buoyed domestic demand.

The recovery has been supported by a rebound in external demand, a pick-up in infrastructure investment, a still-resilient property market, and a moderate inventory restocking cycle propelled by improved growth expectations, analysts at China International Capital Corporation said in a note.

Macro analyst Zhang Deli with China-based Lianxun Securities, noted that a weekly export container shipping index tracked by the Shanghai Shipping Exchange - the China Containerised Freight Index - rebounded sharply in December, pointing to improved export demand.

Growth in China's industrial and retail sectors both beat expectations in November.

A private business survey - the Caixin/Markit Manufacturing PMI - which analysts say focuses more on small- and medium-sized, export-driven Chinese companies - is also expected to show factory activity expanded in December.

But it is also forecast to show slightly more subdued growth than the previous month at 51.7, down from 51.8 in November.

The official PMI and its sister survey on the services sector will be released today.

The Caixin Manufacturing PMI will be published on Jan 2 and the Caixin services PMI survey will be out on Jan 6. - REUTERS