China's manufacturing activity expanded at the fastest pace in nearly four years in December, driven by a strong upturn in production and new orders, survey results from IHS Markit showed Tuesday.
The Purchasing Managers' Index rose to 51.9 in December from 50.9 in November. A 50-plus score suggests expansion in activity and the latest reading pointed to the fastest rate of improvement in the health of the factory sector since January 2013.
Meanwhile, the official PMI suggested a slowdown in the manufacturing sector growth at the end of the year. The official factory PMI fell to 51.4 in December from 51.7 in November.
"The Chinese manufacturing economy continued to improve in December, with the majority of sub-indices looking optimistic," Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group, said.
However, it is still to be seen if the stabilization of the economy is consolidated due to uncertainties in whether restocking and consumer price rises can be sustainable, Zhengsheng added.
The government should set a more flexible growth target to give more room to implement reforms, Huang Yiping, an adviser to the People's Bank of China, told the official Xinhua news agency.
He proposed economic growth in the range of 6 to 7 percent this year versus 6.5 to 7 percent targeted in 2016.
Latest data revealed that production expanded at the fastest pace in nearly six years in December. A number of panelists commented that a strong underlying demand and new client wins underpinned production.
As was the case for output, the rate of new order book expansion accelerated since November, and was the strongest since July 2014. Data indicated that improved domestic demand was the key driver of new business growth, while new export sales were unchanged in December.
Chinese manufacturers reduced their workforce numbers for the thirty-eighth month running, though the rate of job shedding was moderate overall.
Higher amounts of new work led firms to raise their input buying again in December, and at the quickest rate in 29 months. Consequently, stocks of purchases climbed for the first time since September.
Inflationary pressures remained sharp in December, with average input prices rising at the fastest rate since March 2011.
Output charges also rose sharply, despite the rate of increase softening slightly since November's 69-month record.
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