An flash estimate of China’s factory activity fell to a seven-month low in December, despite a cut in interest rates last month to boost the sluggish economy. Meanwhile Japan's manufacturing activity improved.
Hongbin Qu, chief economist, China, at HSBC, said: “The HSBC China Manufacturing PMI (purchasing managers' index) dropped to a seven-month low of 49.5 in the flash reading for December, down from 50.0 in November. Domestic demand slowed considerably and fell below 50 for the first time since April 2014. Price indices also fell sharply.
The rising disinflationary pressures, which fundamentally reflect weak demand, warrant further monetary easing in the coming months.”
The Flash China Manufacturing PMI was at 49.5 in December (50.0 in November) - a seven-month low and blow the no-change level of 50.
Amy Brownbill, economist at Markit, which compiles the PMI surveys, said: “Operating conditions in the Japanese manufacturing sector continued to improve in December, with new orders and output remaining in solid growth territory. Furthermore, the pace of job creation accelerated to the fastest since April. Meanwhile, with the falling yen/dollar rate, input prices continued to rise at a sharp pace.
“The short-term outlook appears broadly positive, although there is some uncertainty with the December general elections taking place.”
The Flash Japan Manufacturing PMI was at 52.1 (52.0 in November) and growth rate little-changed from previous month.
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