China's Dec PMI flat at 50.6%

BEIJING - China's Purchasing Managers' Index for manufacturing sector remained at 50.6 percent in December, said the China Federation of Logistics and Purchasing Tuesday.

This is the third consecutive month that the PMI figure has stayed above 50 percent, which demarcates expansion from contraction, said the CFLP in a report.

Cai Jin, vice chairman of the CFLP, said the continued expansion has suggested a trend of moderate economic recovery and a positive start for the new year's economy.

In November, the figure rose to 50.6 percent from 50.2 percent in October.

Most of the sub-indices saw gains, with the sub-index for input prices up 3.2 percentage points to 53.3 percent from a month earlier. But four sub-indices, including new export order and output sub-index, witnessed slight month-on-month declines that were all within one percentage point.

The PMI data is based on a survey of purchasing managers in more than 820 companies and 20 industries.

The December data has shown improvement in enterprises' operations, as the PMI figure for large firms stayed above 50 percent for four straight months. Small and micro-enterprises rose 2 percentage points to 48.1 percent last month, according to the CFLP.

But Zhang Liqun, an analyst with the Development Research Center of the State Council, a government think tank, said the trend of economic rebound was still weak as the December PMI data stayed at the same level of the previous month.

Judging from the decline in the sub-index of new export order, Zhang said the export condition was still "not good." Considering an upward trend in domestic consumption and investment, the market demand will remain stable, he said.

Chinese commerce minister Chen Deming said last week that the country's foreign trade is expected to increase by around 6 percent year-on-year in 2012, slower than the annual target of 10 percent set by the government.

Zhang said the economy is in transition from growing rapidly toward maintaining stable growth of between 7 to 8 percent annually.

China's GDP rose 7.4 percent in the third quarter from one year earlier, slowing for seven consecutive quarters and marking the lowest growth in more than three years.

Cai said he expected fourth quarter GDP growth to accelerate to 8 percent, which would bring 2012 expansion to 7.8 percent.

However, Cai warned of future inflationary pressure, citing the large increase in input prices sub-index.

China's consumer price index, a main gauge of inflation, grew 2 percent in November year on year, picking up from October's 1.7-percent rise.

The final reading of a privately compiled survey by HSBC also suggested further economic recovery, which on Monday put the December PMI for Chinese manufacturers at 51.5 percent, a 19-month high.

Hongbin Qu, chief economist for HSBC China, said the country's GDP is likely to grow by 8.6 percent in 2013, backed by new impetus in infrastructure construction, a recovery in the property market and increased consumption.