China's PMI Slightly Went Up in January

Department of Service Statistics of NBS

China Federation of Logistics and Purchases (CFLP)

In January, China's manufacturing purchasing managers index (PMI) was 50.5 percent, up by 0.2 percentage points month-on-month.. It indicated that the manufacturing sector was slightly went up after deducting seasonal factors.

In January, among the five sub-indices composing PMI, three sub-indices increased, while of the other two sub-indices decreased.

Production index was 53.6 percent, increased 0.2 percentage points over the previous month, and staying above the threshold for 36 consecutive months, which indicated that the outputs of manufacturing continued to keep expanding. In view of different industries, because of the "Spring Festival" holiday factors, the industrial production which was closely related to the consumers, such as tobacco manufacturing, beverage manufacturing, agro-food processing, and food manufacturing, continued to keep a rapid growth. The production outputs on textiles manufacturing, general equipment manufacturing, non-metallic mineral products manufacturing, and pharmaceutical manufacturing decreased significantly.

In January, the new orders index was 50.4 percent, rose by 0.6 percent points month-on-month, this index returned above the threshold after two consecutive months below 50 percent,, but it was still 4.8 percentage points lower than the historical average of the same period. Driven by two shopping seasons of the "New Year's Day" and "Spring Festival", the new orders of manufacturing increased month-on-month, the total market demands have been restored in some extent. In view of different industries, the new orders indices of tobacco manufacturing, agro-food processing, food manufacturing, beverage manufacturing, textile wearing appeal, footwear and caps manufacturing, leather, fur, feather and related products manufacturing, and other industries were above 60 percent, the market gained relatively strong demands; the new order indices of textiles manufacturing, smelting and processing ferrous metal ores, non-metallic mineral products manufacturing, chemical fiber manufacturing, rubber and plastic manufacturing, and other manufacturing fell below 40 percent continuously, new orders for enterprises were substantial declined. In addition, the export orders index was 46.9 percent, down by 1.7 percentage points over the previous month, below the threshold for four consecutive months, which indicated that the orders from abroad continued to decline in manufacturing, the rebound of market demand in manufacturing was mainly driven by domestic demands.

Main raw materials inventory index was 49.7 percent, up by 1.4 percentage points over the previous month, below the threshold for 9 consecutive months, which indicated that the main raw material inventory of manufacturing continued to reduce. In view of industry, the main raw materials inventory indices of processing of timber, wood, bamboo, rattan, palm and straw products manufacturing, furniture manufacturing, paper manufacturing, printing, and beverage manufacturing located in the high position which above 60 percent,  main raw material inventories for production in enterprises continued to growing; main raw material inventories of medicines manufacturing, communications equipment, computers and other electronic equipment manufacturing, metal products manufacturing, textiles manufacturing, and other industries decreased significantly.

Employed person index was 47.1 percent, down by 1.6 percentage points over the previous month, staying below the threshold for 4 consecutive months, 1.3 percentage points lower than the historical average of the same period. This indicated that the economic growth in the manufacturing sector was slowdown, as well as other factors such as traditional festival like "Spring Festival", and "going-home boom", demands for labor in manufacturing enterprises continued to drop. In view of different industries, in 20 industrial categories, only seven industries showed a slightly increase or remained same level in the amount of employment of the enterprises, such as beverage manufacturing, processing of petroleum and coking, smelting and pressing of non-ferrous metals, smelting and pressing of ferrous metals, the employing index of other industries located below the threshold.

Supplier delivery time index was 49.7 percent, 0.4 percentage points lower over the previous month, standing below the threshold, raw materials supplier delivery times in manufacturing slowed down slightly as compared with the previous month.

In addition, the main raw material purchase price index was 50.0 percent, rose by 2.9 percentage percents over the previous month, standing at the threshold. For the manufacturing sector as a while, the main raw material purchase price changed a little as compared with the previous month, but still staying at historically high price level, the cost pressures of enterprises were still existed. In view of industry, the month-on-month prices of the main raw materials of processing of petroleum and coking, raw chemical materials and chemical products manufacturing, textile manufacturing, chemical fiber manufacturing,  rubber manufacturing, plastic manufacturing, and other industries increased; that of general purpose machinery manufacturing, metal products manufacturing, electrical machinery and equipment manufacturing, smelting and pressing of ferrous metals, transport equipment manufacturing, smelting and pressing of non-ferrous metals, and other industries continued to blow the threshold, purchasing costs continuously slowed down.

Annotations:

1. Explanatory Notes

Purchasing Managers Index (PMI): refers to the index summarized and compiled through the monthly survey on enterprises purchasing managers. It covers enterprises purchasing, production, logistics, and other links. It is one of the leading indices which commonly adopted by international community to monitor the macroeconomic trends, playing an important role in forecasting and monitoring. The threshold of PMI is usually using 50 percent as the cut-off point of economy strength, if PMI is above 50 percent, reflectsing the manufacturing economy is expanding; if it is less than 50 percent, reflects the manufacturing economy is shrinking.

2.Statistical Coverage

The survey Involves 28 manufacturing industry categories in the “Industrial Classification for National Economic Activities" (GB/T4754-2002). The sample size of each industry was determined in accordance with its proportion to the manufacturing sector as a whole.

3. Survey Methods

Manufacturing purchasing managers’ survey was conducted in 820 sampling enterprises, selected by stratified and PPS sampling method from the manufacturing enterprises in the whole country, and was carried out by interviewing the enterprises’ purchasing managers monthly using questionnaire method.

4. Calculation Methods

Manufacturing purchasing managers survey involves 11 questions on production, new orders, export orders, existing orders, finished goods inventory, purchase, import, purchase prices, raw materials, inventory, employees, suppliers, delivery time, and etc.. Diffusion index was calculated on each question, i.e. percentage of positive answers in number of enterprises plus half of the percentage in the same answers.

PMI is a composite index, which was comprised of five diffusion indices (group index) by weighting calculation. The 5 group indices and their weights are based on their leading impacts on the economy. Including: new orders index, weighted 30 percent; production index, weight is 25 percent; employees index, weighted 20 percent; supplier delivery time index, weighted 15 percent; raw materials inventory index, weighted 10 percent.