China’s manufacturing unexpectedly rebounded last month on holiday shopping, official data showed yesterday, as the world’s No. 2 economy showed some resilience despite strife in key export markets.
The purchasing managers index (PMI) reached 50.3 last month, the China Federation of Logistics and Purchasing said in a statement.
A reading above 50 indicates the sector is expanding, while a reading below 50 suggests a contraction.
The group attributed the rebound to seasonal factors, as manufacturers ramped up production to meet higher demand from holiday shoppers for Christmas and Lunar New Year, which falls this month.
Manufacturing returned to expansion last month after contracting for the first time in 33 months in November, when the PMI fell to 49 — down 1.4 points from October — owing to weaker demand from Europe and the US.
The market had expected the index to remain steady at 49 last month, according to a poll by Dow Jones Newswires.
“The rebound in December PMI indicates China’s future economic growth will not have a big slowdown,” said Zhang Liqun (張立群), a researcher at the government think tank the Development Research Center.
However, he added the economy had been affected by a slowdown in developed countries and a shift in China’s own economic drivers last year, as the government turns more toward domestic consumption.
The latest reading of official PMI showed a split from another measure by banking giant HSBC, which on Friday said its indicator reached 48.7 last month.
Beijing is anxious to prevent a sharp slowdown in the economy, but at the same time it wants to avoid reigniting inflation, which hit a more than three year high of 6.5 percent in July, but which has since slowed.
In a bid to boost growth and counter turmoil in Europe and the US, leaders last month cut the amount of money banks must hold in reserve for the first time in three years.
Shanghai-based Industrial Bank Co (興業銀行) economist Lu Zhengwei (魯政委) said that the rebound in the PMI showed that the recent cut in the reserve ratio requirement for banks was having an impact.
“After the shift to a loosening policy, the economy is already starting to reach bottom and stabilize,” he said in a note.