China’s manufacturing activity expanded at its fastest pace in four months in December, underpinned by solid growth in new orders that also led companies to buy more supplies, a Caixin survey showed Tuesday.
The Caixin China General Manufacturing Purchasing Managers’ Index (PMI) rose to 51.5 last month, up from 50.8 in November. The December figure was the highest reading since August.
The indicator is closely watched by investors as one of the first available monthly barometers of the health of the world’s second-largest economy. A number greater than 50 indicates an expansion in activity, while a reading less than 50 means a contraction.
“Manufacturing operating conditions improved in December, reinforcing the notion that economic growth has stabilized in 2017 and has even performed better than expected,” said Zhong Zhengsheng, director of macroeconomic analysis at CEBM Group, a subsidiary of Caixin Insight Group.
The pickup in December’s manufacturing PMI came on the back of strong demand both at home and abroad. Both new export orders and overall new business received by manufacturers increased at the quickest clip in four months, according to the survey, which is sponsored by Caixin and compiled by international information and data analytics provider IHS Markit Ltd.
Output expanded at the same pace as in August, matching the highest monthly rate of the year, with companies citing improved sales and stronger underlying market demand as key sources of economic growth.