China’s manufacturing reaches 14-month high

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China’s manufacturing reaches 14-month high

HONG KONG - China’s manufacturing activity rose to a 14-month high in December amid signs the country’s economy has started to recover, a British bank said Friday.

In a monthly report, HSBC Ltd. said its flash purchasing managers index (PMI) for China’s manufacturing sector came in at 50.9 for this month, up from 50.5 in September.

The flash PMI is a preliminary index that measures the health of a country’s manufacturing sector.

A reading of 50 or above represents an expansion of the sector from the previous month while a reading of below 50 represents a contraction.

HSBC said China’s manufacturing growth has hit the bottom.

“As December flash manufacturing PMI picked up further to a 14-month high, it confirmed that China’s ongoing growth recovery is gaining momentum mainly from domestic demand conditions,” said Qu Hongbin, a chief economist at HSBC.

Qu said there was a drop in new export orders, suggesting the persisting external headwinds.

“This calls for Beijing to keep an accommodative policy stance to counter-balance the external weakness, provided inflation stays benign,” he said.

The Chinese central bank has been cautious in cutting benchmark interest rates, the amount of money local banks are required to have in reserve, but it has been more actively engaged in open market operations to increase market liquidity.

China’s gross domestic product (GDP) grew 7.4 percent on-year in the July-September period, slowing from a 9.1 percent increase during the same period a year earlier.

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