Industry PMI Photo:VCG

Caixin manufacturing Purchasing Managers Index (PMI) stood at 53 in December, down 1.9 percentage points from November, according to data released on Monday, reflecting a continued recovery of China's services sector following the impact of COVID-19, analysts said.

The Caixin PMI is in accordance with the PMI gauge released by the National Bureau of Statistics (NBS) on Thursday. Official data stood at 51.9 in December, edging down 0.2 percentage points from a month earlier, but remaining in the expansion territory for 10 months in a row.

The slight decline in the PMI is a normal seasonal fluctuation, as the production activity fell slightly in the end of the year following the production circle, Liu Xuezhi, an economist at the Bank of Communications told the Global Times on Monday.

"But the latest data is still at the range of expansion, indicating a continued strong rebound in production and manufacturing industry," Liu said.

With the demand of the manufacturing sector performing well, the index of manufacturing production and new orders in December remained in the expansion range for the tenth and seventh months despite dropping slightly from November. 

Across December export demand has steadily improved against uncertainty of the overseas epidemic situation, with new export orders also in the expansion range for the fifth consecutive month.

Manufacturing purchases of raw materials continued to expand in December, posting its highest reading since January 2018, pushing the manufacturers to raise their input cost with biggest range in more than three years, per Caixin data.

Given the prospect of a stronger global demand and the end of the epidemic, production across the manufacturing industry over the next year is to exceed the current level and stay high above the expansion line, the Caixin data predicted.

Although the last month of 2020 saw localized instances of COVID-19, these sporadic cases will not impact manufacturing confidence, analysts said.

"These sporadic infections will not change the trend of industrial manufacturing recovery. The overall growth in manufacturing sector is expected to continue in 2021 and stay above the expansion line," Liu said.