Chinese manufacturing records a 14-month high which means that the world’s second-largest economy is showing signs of recovery.
Putting things in perspective in a statement, HSBC analyst, Hongbin Qu, said, “The latest data confirmed that China’s ongoing growth recovery is gaining momentum mainly driven by domestic demand conditions. However, the drop of new export orders and the downside surprise of November exports growth suggest the persisting external headwinds.

This calls for Beijing to keep an accommodative policy stance to counter-balance the external weakness, provided inflation stays benign.” However, the conclusions from this data was based on a preliminary version of the monthly HSBC Purchasing Manager Index where responses from 75 to 80 percent of the 420 companies are compiled. According to this report, the index rose to 50.9 this month which was an increase from November’s 50.5. These gains in December were unexpected considering the weak November trade data that suggested that China economic recovery was shaky. Employment as well as new orders also registered an increase in the report.

Almost all the sub-indexes showed improvement except those related to output and new export orders. New exports order, in particular, took a dive in December registering 2.9 percent annual growth from compared to October’s 11.6 percent. It must be pointed out that the sub-index for employment was the highest it has been since February while the sub-index for new orders showed an increase for the fifth month in a row. A government report also showed that industrial production has risen to an 8 month high while inflation also climbed above 33-month lows.