(Bloomberg) -- A gauge of China’s manufacturing sector held steady at a reading signaling expansion in December, adding to evidence that the world’s second-largest economy is stabilizing.
The manufacturing purchasing managers’ index remained at 50.2, according to data released by the National Bureau of Statistics on Tuesday. The outlook for export-oriented firms brightened, with a sub-index of new orders for export rising above the 50 mark for the first time since May 2018. On the downside, the non-manufacturing gauge fell to 53.5 from 54.4.
Production recovered for a second month, rising to the highest since August 2018, and output prices narrowed their decline.
China’s economy appears to be reaching the bottom of a cyclical slowdown as 2019 draws to a close, aided by the prospect of a trade deal with the U.S. being signed in the coming days. Domestic stimulus efforts, ranging from tariff cuts to support for infrastructure spending, are also buoying sentiment.
The upcoming Lunar New Year has boosted the domestic market while the Christmas season bolstered overseas demand, according to a statement by the China Logistics Information Center, which helps compile the data. News about a phase-one trade deal has stabilized market confidence and expectations, which benefits both imports and exports, it said.
The White House’s leading China hawk, trade adviser Peter Navarro, said Monday that a preliminary trade deal with Beijing is completed.
“That’s a done deal, put that one in the bag,” Navarro said on Fox News.
“The potential de-escalation of China-U.S. trade tension, improved global manufacturing demand, inventory restocking driven by lessening demand headwinds, and accelerated infrastructure investment growth in China may continue to support a moderate cyclical recovery,” China International Capital Corp. economist Eva Yi wrote in a note. “Gross domestic product growth in the fourth quarter may pick up on a sequential basis compared with the third quarter.”
Economists had forecast a slight decline in the PMI reading after a strong rise in November. Bloomberg’s deck of the earliest indicators for the month however had foreshadowed the rise.
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