China’s factory recovery moderates in December

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    BEIJING- China’s factory activity expanded in December as hot export demand fueled a recovery in the world’s second-largest economy from the coronavirus slump, although higher labor and transport costs slowed the pace of growth.

    The official manufacturing Purchasing Manager’s Index (PMI) fell to 51.9 in December from 52.1 in November, data from the National Bureau of Statistics (NBS) showed on Thursday.

    The index remained above the 50-point mark that separates growth from contraction but was a tad below the 52.0 in a Reuters’ poll of analysts.

    China’s vast industrial sector has staged an impressive recovery from the coronavirus shock thanks to surprisingly strong exports. The economy is expected to expand around 2 percent for the full year – the weakest pace in over three decades but much stronger than other major economies still struggling to contain infections.

    However, tougher coronavirus control measures in many of its key trading partners in the west and recent domestic infections could dent industrial demand, weighing on the recovery.

    The official PMI, which largely focuses on big and state-owned firms, showed the sub-index for new export orders stood at 51.3 in December, easing from 51.5 a month earlier.

    But an index for factory prices rose strongly, reflecting solid overseas demand as well as increased shipping costs, even though some export markets are under lockdown, said Iris Pang, chief economist for Greater China at ING. Economic indicators ranging from trade to producer prices all suggest a further pickup in the industrial sector.