China PMI Hits a 4-Year High, Sustainable Growth?

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China’s Caixin manufacturing purchasing managers’ index rose to 51.9 in December from 50.9 in November and beat market expectations.

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The figure marks the sixth straight month of growth and the strongest showing for manufacturing in China since January 2013.

China Caixin Manufacturing PMI. Source: Tradingeconomics..com.

By now it’s pretty clear that this growth has been the main driver of higher metal prices in 2016. Industrial production in China has been on an upswing for most of the year, mainly because of the surge in infrastructure spending.

China PMI Up

However, there are concerns that the country’s demand growth rates could slow next year. The real estate and automotive sectors are the engine propelling this rapid growth. If the demand growth from these sectors slows, this could have strong repercussions on China’s demand for industrial metals.

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