Private survey shows manufacturing activity in China to have expanded in December

Markit/Caixin revealed China’s Purchasing Managers’ Index (PMI) on Thursday that announced the manufacturing activity in the country to have expanded in December. The figure, however, came shy of the analysts’ estimate as well as the figure posted in November.

The report announced the Caixin PMI at 51.5 for the last month. Noting a figure above 50 represented continued expansion in the manufacturing activity. Analysts, however, had anticipated a slightly higher 51.7 in December. In November, the private survey had recorded China’s PMI at 51.8.

Rate Of Expansion In Manufacturing Activity Remained Slower In December

In a comment following the economic data, IHS Markit and Caixin remarked that that domestic demand as well as business sentiment improved in the month of December. The rate of expansion, however, was highlighted as slower than the previous months of October and November.

China’s bureau of statistics had also announced the official report on Tuesday highlighting manufacturing PMI in December. The official data was also posted above expectations. At 50.2, the figure represented continued expansion in China’s manufacturing activity.

Global financial markets and China’s market sentiment in particular previously remained under pressure due to the ongoing trade war with the United States of America. With the optimism starting to circle around the trade negotiations, analysts and investors are interested in seeing how the markets respond. President Trump tweeted earlier this week that he plans on signing the phase 1 trade deal with China on January 15^th at the White House.

While the Bureau of Statistics focused largely on state-owned enterprises and bigger companies, Markit/Caixin covers the small and medium-sized enterprises.

China’s Central Bank To Opt For Further Monetary Policy Adjustments

According to Capital Economics’ Julian Evans-Pritchard, China’s economy may have ended the last year showing expansion in the manufacturing PMI, there are, however, further complications that need to be addressed for the largest Asian economy to catch the pace. He particularly cited domestic demand specifically in the property sector to continue to weigh on the economy at large. The economist also added that in the next few quarters, China’s central bank is likely to rely more than expected on further adjustments in the monetary policy.

In order to boost the economy, the People’s Bank of China declared on Wednesday that the cash required to be held as a reserve for all banks is being cut down.

The forex market responded moderately to the economic data on Thursday with the USD/CNY pair having dropped from 6.9715 to 6.9606 level where it is currently settling.