Factory activity in China expanded for a second straight month in December, as production quickened and export orders rose, offering some support for the manufacturing sector amid signs of progress in trade talks with the United States.
China's official Purchasing Managers' Index (PMI) was unchanged at 50.2 in December from November, the National Bureau of Statistics said on Tuesday, and remained above the 50-point mark that separates monthly growth from contraction. November's gain had ended six straight months of contraction.
Analysts polled by Reuters expected the December PMI to be 50.1.
The better-than-expected readings suggested some recovery in the world's second-largest economy this month. Production rose at the fastest pace in over a year while growth of total new orders remained buoyant, only a notch lower than a recent high hit last month.
December's expansion comes amid signs of improvement in Sino-U.S. trade talks, which have boosted global investor confidence and helped Chinese manufacturers book new orders from abroad.
New export orders, in particular, rose for the first time since May 2018 in December.
China and the United States announced a Phase 1 agreement that would reduce some U.S. tariffs in exchange for more Chinese purchases of American farm products, which analysts believed could stimulate China's exports and corporate investment in the near-term.
Profits at China's industrial firms grew at the fastest pace in eight months in November on quickening output and sales.
Factories continued to shed jobs in December, but the pace of reduction did not accelerate.
Over 25 million jobs were trimmed from the industrial sector from end-2013 to end-2018, mostly in labour intensive industries, the latest economic census showed, as labour costs rose.
However, growth in China's services sector activity cooled in December.
The official non-manufacturing PMI dropped to 53.5, from an eight-month high of 54.4 in November, a separate NBS survey showed.
Beijing has relied on a strong services sector to offset manufacturing weakness. However, a broader economic slowdown since late last year has limited the sector's resilience.
China plans to set a lower economic growth target of around 6% in 2020 from this year's 6-6.5%, relying on increased state infrastructure spending to ward off a sharper slowdown.