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China factory conditions weaken for 10th month

“The Caixin China Manufacturing Index for December fell to 48.2 which, being below 50, indicates contraction and underlines the continuing evidence of weakness in the manufacturing sector”.

Italy’s services sector expanded at the fastest rate in nearly six years in December, a survey showed on Wednesday, suggesting a recovery is taking hold in the eurozone’s third-largest economy.

The Caixin/Markit manufacturing purchasing managers’ index (PMI) fell to 48.2 in December 2015.

Caixin’s subindex measuring production fell for the seventh time in eight months, driven by a decline in new orders, which are seen as an indicator of overall demand.

Policymakers are coming under pressure from employment which had been steady, as they try to meet premier Li Keqiang’s goal of about 7 per cent growth this year which has been steady thanks to a resilient services sector.

This is down from 52.5 in November, and the sector’s 16-month peak of 55.5 in October.

Interestingly, despite global trade being sluggish and India’s exports continuing to contract, participants reported increase in new business from overseas during December. “This suggests that conditions are likely to remain challenging in the near-term”, De Lima said.

“The best performing categories in December were “other services” and financial intermediation”, it said. But the rate of expansion eased over the month. This is the lowest level of the index since March 2013. According to the survey, new orders came in at the slowest pace in five months. A similar survey due later on Monday will probably show the downturn in US factories continued in December, despite evidence of a very strong services economy and an interest rate hike from the US Federal Reserve a few weeks ago. Despite reaching seven-month highs, rates of inflation were below their respective long-run averages, the PMI survey showed.

However, the report pointed out that factory output rose for the 33rd month in a row, underpinned by higher domestic orders and exports to such countries as continental Europe, the USA and China. Manufacturers passed part of the additional cost burden on to clients as charges increased further.

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