China Dec factory activity shrinks for 10th month: Caixin PMI

The Caixin/Markit China Manufacturing Purchasing Managers’ Index (PMI) slipped to 48.2 in December, below market expectations of 49.0 and down from November’s reading of 48.6.

“Growth momentum is stabilising somewhat, however, as the index remained below 50 for five consecutive months, the manufacturing sector is still facing strong headwinds”, said Zhou Hao, an economist at Commerzbank AG in Singapore.

‘With export growth solid and production, sales and new orders all on the rise, there is now a very good base from which manufacturers can launch a prosperous 2016, ‘ he said. On Wednesday, January 2016, the Caixin China services PMI data for the month of December 2015 is due.

Official PMI data released over the weekend showed the index was at 49.7 in December, in line with forecasts from a Reuters poll and up a tad from November’s 49.6.

Policymakers looking ahead to the new year are faced with old economic drivers that still aren’t showing any signs of a pick-up even amid fresh indications of strength in the new ones, despite six People’s Bank of China interest-rate cuts and stepped up fiscal stimulus.

The Ai Group’s PMI survey recorded a result of 51.9 for December, down slightly from November’s 52.5. The reading came in above 50 for the first time since February.

China’s growth rate is expected to be 6.8 percent in 2015, according to the International Monetary Fund’s latest “World Economic Outlook” report published in October. The IMF predicted further slowing growth in 2016, of 6.3 percent.

The government is expected to increase its budget deficit to about 3 per cent of gross domestic product in 2016 to help boost activity.