China's December PMI of manufacturing sector drops to 53.9 pct
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The Purchasing Managers Index (PMI) of China's manufacturing sector dropped to 53.9 percent in December, down 1.3 percentage points from November, the China Federation of Logistics and Purchasing (CFLP) said Saturday.
It was the 22nd straight month the index was above the boom-and-bust line of 50 percent. Before dropping in December, the index had risen for four consecutive months.
The drop was a delayed response to the drop in commodity prices in November, which the November PMI had failed to reflect, said Haitong Securities analyst Liu Tiejun.
The PMI is a package of indices that measure the performance of the country's manufacturing sector. A reading above 50 percent indicates economic expansion. One below 50 percent indicates economic contraction.
The December PMI data does not indicate China's economic growth has slowed, as returns on value-added industrial activity, exports and investment grew significantly in November, said Zhang Liqun, a researcher at the State Council's Development Research Center.
He said the decline was mainly caused by a decrease in new domestic orders.
Among the 11 sub-indices, new orders and input prices indices fell the most. The new orders index dropped 2.9 percentage points while the input prices index fell 6.8 percentage points.
Cai Jin, deputy chairman of the CFLP, said the drop showed the government's tightening measures to rein in inflation have worked.
The consumer price index, the main gauge of inflation, surged to a 28-month high of 5.1 percent in the year to November, exceeding the government's target ceiling of 3 percent for the year.
With inflation running at a record high, China announced in December it would in 2011 shift its monetary policy stance from relatively loose to prudent.
The proactive fiscal policy which China implemented in late 2008 to aid the national economy through the global financial crisis will continue in 2011, however, authorities said.
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