REPEAT: China Dec Caixin Mfg PMI Rebounds To 4-Month High

Repeats Story Initially Transmitted at 03:13 GMT Jan 2/22:13 EST Jan 1

     BEIJING (MNI) - Activity in China's manufacturing sector saw a strong

improvement in December as output and new orders grew at faster paces, according

to the latest Caixin Manufacturing Purchasing Managers' Index (PMI) released

Tuesday.

     The headline manufacturing PMI registered 51.5, the highest level in four

months, up from 50.8 in November. The index remained above the 50 break-even

mark for the sixth consecutive month, according to data compiled by IHS Markit

for Caixin magazine. 

     Readings above 50 indicate expansion in the manufacturing sector while

readings below 50 indicate contraction. The higher the PMI reading above 50, the

faster the expansion in the sector. The lower the reading below 50, the faster

the contraction.

     The performance shown by the Caixin index -- which focuses on smaller and

medium-size companies -- was somewhat at odds with the official manufacturing

PMI jointly released on Sunday by the China Federation of Logistics and

Purchasing and the National Bureau of Statistics. The CFLP/NBS PMI edged down to

51.6 in December from 51.8 in November, matching expectations. 

     Output expanded at the quickest pace in three months due to robust sales

and strong underlying demand during the month. 

     New orders recorded the strongest growth since August resulting from rising

exports at the end of the year, Caixin said.

     The increased output prompted stronger buying activity by manufacturers,

with demand for inputs showing the fastest growth since August.

     Input prices continued their sharp increase in December, although the pace

of increase eased to a four-month low. Caixin said the higher costs were due

largely to rising prices for raw materials.

     "Consequently, firms increased their selling prices solidly," Caixin said. 

     Manufacturing firms continued to cut staff in December, though the pace of

job losses dropped to the slowest in nine months. 

     "Lower staff numbers contributed to another rise in outstanding business,

with the rate of accumulation quickening slightly since November," Caixin

explained. 

     The average time taken for input delivery lengthened further due to stock

shortages at suppliers and delays due to environmental inspections. Inventories

of finished goods declined slightly as new orders increased.

     The business outlook one year ahead picked up slightly from last month, but

remained below the historical average, as forecasts of weak client demand and

changes to national economic policies dampened confidence at the end of 2017,

Caixin argued.

     "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 research subsidiary of Caixin, "However, we should not

underestimate downward pressure on growth next year due to tightening monetary

policy and strengthening oversight on local government financing."

     The Caixin Manufacturing PMI is based on data compiled from monthly replies

to questionnaires sent to purchasing executives at more than 500 manufacturing

companies.

--MNI Beijing Bureau; +86 (10) 8532 5998; email: marissa.wang@marketnews.com

--MNI BEIJING Bureau; +1 202-371-2121; email: john.carter@mni-news.com