China Manufacturing Sector Growth Softens In December

(RTTNews) - China's manufacturing sector expanded at a softer pace in December largely due to weaker foreign demand, survey results from S&P Global showed Wednesday.

The Caixin manufacturing Purchasing Managers' Index posted 50.5 in December, down from 51.5 in November. The score was expected to climb to 51.6.

The survey showed that conditions in the manufacturing sector improved for a third straight month but the pace of growth eased since November.

The official PMI data released earlier this week showed that the manufacturing sector expanded only marginally in December. The PMI dropped to 50.1 from 50.3 in the previous month.

Manufacturing output expanded for a fourteenth consecutive month but the rate of expansion decelerated on softening new order growth, said S&P Global.

Although improvements in underlying demand and successful business development efforts led to incoming new orders rising for a third month, the rate of growth eased on the back of softening external demand, data showed.

Meanwhile, purchasing activity increased for the third month in a row. Stocks of purchases rose in tandem, with anecdotal evidence highlighting intentions of safety stock building among some manufacturers.

Manufacturing headcounts decreased again in December although the decrease was the softest in the current four-month sequence.

Turning to prices, the survey showed that average selling prices declined for the first time since September. Although the rate of decline was moderate, this contrasted with another increase in input prices.

Respondents indicated that they had absorbed cost increases and further lowered selling prices to lift sales. Export charges also decreased in December.

Finally, business confidence eased at the end of the year. Chinese manufacturers were the least upbeat since September due to concerns about the outlooks for growth and trade, especially amidst the US tariffs threat, challenged hopes for new product- and policy-driven sales growth in the New Year.

"The external environment is expected to be more complex this year, requiring early policy preparation and instant response," Caixin Insight Group senior economist Wang Zhe said.

"In addition, future policy efforts should focus more on increasing household income and improving people's livelihoods, with particular attention paid to increasing socially disadvantaged groups' ability and willingness to spend," Zhe added.