China manufacturing activity rises in December

China manufacturing activity rises in December

Beijing: Manufacturing in China continued to expand in December as new orders received by factories rose for the ninth month in a row on booming demand from home and abroad, a survey showed Monday.

The HSBC China Manufacturing PMI, or purchasing managers’ index, rose to 56.1 in December from 55.7 in November, the survey showed.

A reading above 50 means the sector is expanding, while a reading below 50 indicates an overall decline.

“The second round effect of stimulus measures is filtering through to substantially benefit the manufacturing sector as we expected," Qu Hongbin, chief economist for China at HSBC, said in a statement.

A separate official PMI published by the China Federation of Logistics and Purchasing showed manufacturing activity rose to 56.6% in December — the highest reading in 20 months.

The HSBC survey showed manufacturing output rose for the ninth consecutive month in December and growth in new export orders was the fastest since March 2005.

Staffing levels in the sector continued to rise in December as a result of increased production requirements, and job creation was the third-fastest since the survey began in April 2004, HSBC said.

Prices charged by Chinese manufacturers increased at the fastest pace since July 2008 on potent market demand and surging costs on raw materials such as steel, aluminium, coal, petroleum, textiles and zinc, the survey showed.

“The significant increase in the Output Prices Index in recent months is due to stronger demand and rising input costs, which have added to inflationary pressures," said Qu.

“Yet, we believe inflation will be manageable in the coming months."

China’s export-driven economy is expected to easily exceed the government’s oft-stated target of 8% growth in 2009, mainly as a result of massive stimulus spending to combat the crisis.

The nation’s economy expanded by 8.9% in the third quarter, up from 7.9% in the second quarter and 6.1% in the first three months.

In 2008, manufacturing accounted for more than 40% of economic output in China, which has been hit hard by evaporating demand for its products in key export markets such as the United States and Europe.