China's Manufacturing Activity Rises in December

Increased demand from both home and abroad

New orders received by factories rose for the ninth month in a row. Demand was booming from both home and abroad. The HSBC China Manufacturing PMI, or purchasing managers' index, rose to 56.1 in December from 55.7 in November, the survey showed on Jan. 4

"The second round effect of stimulus measures is filtering through to substantially benefit the manufacturing sector as we expected," Qu Hongbin, chief economist for China at HSBC, said.

A separate official PMI published by the China Federation of Logistics and Purchasing showed manufacturing activity rose to 56.6% in December -- the highest reading in 20 months.

The HSBC survey showed manufacturing output rose for the ninth consecutive month in December and growth in new export orders was the fastest since March 2005.

Staffing levels in the sector continued to rise in December as a result of increased production requirements, and job creation was the third-fastest since the survey began in April 2004.

Prices charged by Chinese manufacturers increased at the fastest pace since July 2008 on potent market demand and surging costs on raw materials such as steel, aluminum, coal, petroleum, textiles and zinc.

"The significant increase in the Output Prices Index in recent months is due to stronger demand and rising input costs, which have added to inflationary pressures," said Qu. "Yet, we believe inflation will be manageable in the coming months."

In 2008, manufacturing accounted for more than 40% of economic output in China.

Copyright Agence France-Presse, 2010

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