By Jason Subler
BEIJING, Jan 4 (Reuters) - China's manufacturing sector contracted for the third month in a row in December, but the pace of deterioration slowed as output and new orders improved slightly, an official survey showed on Sunday.
The official purchasing managers' index (PMI) rose to 41.2 in December from the record low of 38.8 plumbed in November, the China Federation of Logistics and Purchasing (CFLP) said.
The reading was similar to that of the CLSA PMI, released on Friday. That index eased up to 41.2 in December from a record low of 40.9 in November, despite a record drop in output.
Both indexes are designed to give a timely snapshot of the state of the manufacturing sector, which has been a major driver of China's headlong economic growth in recent years.
Readings over 50 indicate an expansion of activity in the manufacturing sector, while those below 50 suggest a deterioration.
'This month's PMI shows that the Chinese economy continues to lose momentum, but there are signs of it hovering around a bottom,' said Zhang Liqun, a government economist who comments on the official survey for the logistics federation.
'As the adjustment in stocks of goods starts to taper off and macroeconomic policies start to show results, the slowdown in growth will probably become less pronounced in the future.'
Concerned about a potential spike in unemployment that could feed social unrest, authorities have taken a series of steps to prop up growth, including launching a 4 trillion yuan ($586 billion) stimulus package and repeatedly cutting interest rates.
The government is aiming to maintain economic growth at 8 percent in 2009, the pace seen as necessary to create enough new jobs, but many economists say it could fall well below that.
In the details, the official PMI offered a mixed picture on the outlook for the manufacturing sector, a major employer of migrant workers.
The employment sub-index fell to 43.3 from 44.3 in November, indicating that factories continued to accelerate their job cuts.
The export order sub-index rose to 30.7 in December from 29.0 in November, showing that orders from overseas customers shrank for the sixth month in a row, albeit slightly less quickly. The sub0index for new orders as a whole rose to 33.7 from 32.3.
The input price index rose to 32.7 from 26.6 in November, suggesting that deflationary pressures are easing somewhat.
The federation also noted that various industries were faring quite differently in the face of the financial crisis.
The beverage and pharmaceutical sectors were the only ones to enjoy a reading above 50 in December, showing that they are still expanding, it said.
Makers of transport equipment, metals, chemical fibres and furniture were among the hardest hit, with readings below 40.
Following is a breakdown of the purchasing managers' index:
Dec Nov Oct Sep Aug Jul
Overall PMI 41.2 38.8 44.6 51.2 48.4 48.4
Output 39.4 35.5 44.3 54.6 48.7 47.4
New orders 37.3 32.3 41.7 51.3 46.0 46.2
New export orders 30.7 29.0 41.4 48.8 48.4 46.7
Backlogs of orders 35.8 36.0 40.7 47.3 45.4 ~
Stocks of finished goods 44.7 50.8 51.4 50.5 49.0 ~
Quantity of purchases 36.2 34.2 42.4 50.8 46.8 47.1
Imports 33.3 32.2 39.4 46.4 45.3 ~
Input prices 32.7 26.6 32.3 44.7 57.8 71.3
Stocks of purchases 40.6 39.5 42.6 47.5 46.8 ~
Employment 43.3 44.3 47.0 50.3 50.7 ~
Suppliers' delivery times 50.4 50.7 50.8 50.8 49.5 ~
(Reporting by Jason Subler; Editing by Kim Coghill) Keywords: CHINA ECONOMY/PMI (jason.subler@thomsonreuters.com; +8610 6627 1215; Reuters Messaging: jason.subler.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
BEIJING, Jan 4 (Reuters) - China's manufacturing sector contracted for the third month in a row in December, but the pace of deterioration slowed as output and new orders improved slightly, an official survey showed on Sunday.
The official purchasing managers' index (PMI) rose to 41.2 in December from the record low of 38.8 plumbed in November, the China Federation of Logistics and Purchasing (CFLP) said.
The reading was similar to that of the CLSA PMI, released on Friday. That index eased up to 41.2 in December from a record low of 40.9 in November, despite a record drop in output.
Both indexes are designed to give a timely snapshot of the state of the manufacturing sector, which has been a major driver of China's headlong economic growth in recent years.
Readings over 50 indicate an expansion of activity in the manufacturing sector, while those below 50 suggest a deterioration.
'This month's PMI shows that the Chinese economy continues to lose momentum, but there are signs of it hovering around a bottom,' said Zhang Liqun, a government economist who comments on the official survey for the logistics federation.
'As the adjustment in stocks of goods starts to taper off and macroeconomic policies start to show results, the slowdown in growth will probably become less pronounced in the future.'
Concerned about a potential spike in unemployment that could feed social unrest, authorities have taken a series of steps to prop up growth, including launching a 4 trillion yuan ($586 billion) stimulus package and repeatedly cutting interest rates.
The government is aiming to maintain economic growth at 8 percent in 2009, the pace seen as necessary to create enough new jobs, but many economists say it could fall well below that.
In the details, the official PMI offered a mixed picture on the outlook for the manufacturing sector, a major employer of migrant workers.
The employment sub-index fell to 43.3 from 44.3 in November, indicating that factories continued to accelerate their job cuts.
The export order sub-index rose to 30.7 in December from 29.0 in November, showing that orders from overseas customers shrank for the sixth month in a row, albeit slightly less quickly. The sub0index for new orders as a whole rose to 33.7 from 32.3.
The input price index rose to 32.7 from 26.6 in November, suggesting that deflationary pressures are easing somewhat.
The federation also noted that various industries were faring quite differently in the face of the financial crisis.
The beverage and pharmaceutical sectors were the only ones to enjoy a reading above 50 in December, showing that they are still expanding, it said.
Makers of transport equipment, metals, chemical fibres and furniture were among the hardest hit, with readings below 40.
Following is a breakdown of the purchasing managers' index:
Dec Nov Oct Sep Aug Jul
Overall PMI 41.2 38.8 44.6 51.2 48.4 48.4
Output 39.4 35.5 44.3 54.6 48.7 47.4
New orders 37.3 32.3 41.7 51.3 46.0 46.2
New export orders 30.7 29.0 41.4 48.8 48.4 46.7
Backlogs of orders 35.8 36.0 40.7 47.3 45.4 ~
Stocks of finished goods 44.7 50.8 51.4 50.5 49.0 ~
Quantity of purchases 36.2 34.2 42.4 50.8 46.8 47.1
Imports 33.3 32.2 39.4 46.4 45.3 ~
Input prices 32.7 26.6 32.3 44.7 57.8 71.3
Stocks of purchases 40.6 39.5 42.6 47.5 46.8 ~
Employment 43.3 44.3 47.0 50.3 50.7 ~
Suppliers' delivery times 50.4 50.7 50.8 50.8 49.5 ~
(Reporting by Jason Subler; Editing by Kim Coghill) Keywords: CHINA ECONOMY/PMI (jason.subler@thomsonreuters.com; +8610 6627 1215; Reuters Messaging: jason.subler.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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