Purchasing Managers Index for August 2019

Department of Service Statistics of NBS

China Federation of Logistics and Purchasing(CFLP)

1. Manufacturing Purchasing Managers Index

In August 2019, China’s manufacturing purchasing managers index (PMI) was 49.5 percent, slightly fell 0.2 percent point from the previous month.

In the view of enterprise scale, the PMI of large-sized enterprise was 50.4 percent, down 0.3 percent point from last month, still stayed in the extension range; that of medium-sized was 48.2 percent, fell 0.5 percentage point from last month, and below the threshold, that of small-sized enterprises was 48.6 percent, higher 0.4 percent point than last month and below the threshold.

Among the five sub-indices composing PMI, the production index and supplier distribution time index were higher than the threshold, while the new orders index, main raw materials inventory index and employment index were lower than the threshold.

Production index was 51.9 percent, down 0.2 percent point from last month, but still above the threshold, indicating that the overall production of manufacturing continued to expand.

New orders index was 49.7 percent, down 0.1 percent point from last month, and was below the threshold, indicating that the order quantity of manufacturing production demand has declined.

Main raw materials inventory index was 47.5 percent, lower 0.5 percent point than last month, and was below the threshold, indicating that main raw materials inventory amount has declined.

Employee index was 46.9 percent, down 0.2 percent point from last month, and was below the threshold, indicating that the manufacturing enterprises’ labor employment consumption has slightly decreased.

Supplier distribution time index was 50.3 percent, slightly higher 0.2 percent point than last month, and was above the threshold, indicating that the distribution time of manufacturing raw materials supplier gets faster.

2. Non-manufacturing purchasing managers index

In August 2019, China’s non-manufacturing business activities index was 53.8 percent, higher 0.1 percent point than the previous month, indicating that the non-manufacturing industry has maintained the momentum of expansion and the growth rate has accelerated slightly.

In the view of different industries, non-manufacturing business activity index of service industry was 52.5 percent, lower 0.4 percent point than last month, and the service industry maintained growth with a slightly slowdown. Of which, the indices of railway transport, telecommunications broadcasting and television satellite transmission services and Internet, software and information technology services were positioned in the high level of the range which is above 58 percent, showing that these industries were comparatively active. While non-manufacturing business activity index of transport via road, other financial intermediation, and real estate stayed in the contraction range. Of which, construction industry index was 61.2 percent, higher 3.0 percent points than last month indicating that the prosperity has promoted.

New orders index was 50.1 percent, lower 0.3 percent point from last month but still higher than the threshold, indicating that the growth of non-manufacturing market demand has slowed down. In terms of different industries, new orders index of service industry was 49.4 percent, lower 0.3 percent point than last month. Of which, construction industry was 53.9 percent, lower 0.8 percent points than the previous month.

Input price index was 50.8 percent, down 2.1 percent points from last month and was above the threshold, indicating that the total increase of input price for operating activities of non-manufacturing enterprises has narrowed. In terms of different industries, input price index of service industry was 51.2 percent, down 1.5 percent points from last month. The input price index of construction industry was 48.9 percent, down by 4.7 percent points from the previous month.

Sales price index was 49.1 percent, down 1.5 percent points from the previous month, falling below the threshold, indicating that the overall level of non-manufacturing sales price has declined. In terms of different industries, the sales price index of service industry was 48.7 percent, down 1.8 percent points from last month, while the sales price index of construction industry was 51.5 percent, higher 0.4 percent points than last month.

Employment index was 48.9 percent, up 0.2 percent point from the previous month, and was still below the threshold, indicating that the employment boom of non-manufacturing enterprises continued rising. In terms of different industries, the employment index of service industry was 48.2 percent, up 0.1 percent point from last month. The employment index of construction industry was 52.7 percent, up 0.6 percent points from last month.

Business activities expectation index was 60.4 percent, higher 0.6 percent point than last month, returning to the high-level boom zone, indicating that non-manufacturing enterprises have more confidence in future market development. In terms of different industries, the business activities expectation index of service industry was 59.8 percent, higher 0.7 percent point than last month. The business activities expectation index of construction industry was 64.0 percent, up by 0.3 percent points from the previous month.

3. Composite PMI Output Index

In August 2019, China's Composite PMI Output Index was 53.0 percent, slightly down 0.1 percent point from the previous month, indicating that the current production and operation activities of Chinese enterprises maintained a steady development in general.

Annotations:

1. Explanatory Notes

Purchasing Managers Index (PMI) is an index summarized and compiled through the results of the monthly survey of enterprises purchasing managers. It covers every links of the enterprises, including purchasing, production, logistics, and so on. It is one of the leading indices which was commonly adopted by international society to monitor the macroeconomic trends, and played an important role in forecasting and monitoring. The Composite PMI Output Index, belonging to the PMI indicator system, is a composite index reflecting the changes in the output in current period of the entire industry (manufacturing and non-manufacturing industries). The threshold of PMI is usually using 50 percent as the cut-off point for economic performance. If PMI above 50 percent, it reflects the overall economy is expanding; if less than 50 percent, it reflects the overall economy is in recession.

2.Statistical Coverage

The survey involves 31 divisions of manufacturing industry in the “Industrial Classification for National Economic Activities” (GB/T4754-2017), and 3000 samples, as well as 31 divisions of non-manufacturing industry, and 4000 samples.

3. Survey Methods

PPS (Probability Proportional to Size) sampling method was adopted in purchasing managers’ survey. Using the divisions of the manufacturing or non-manufacturing industry as the selecting strata, the sample size of each division is proportional to its proportion of the value-added of the division to the total value-added of the manufacturing or non-manufacturing industry. Within the stratum, the samples are selected according to the probabilities proportional to their principal business revenues of the enterprises.

The survey was organized and conducted by staff members of survey offices, monthly through Online Reporting System of NBS by sending survey questionnaires to the purchasing managers of the selected enterprises.

4. Calculation Methods

(1) Calculation Methods of Sub-indices.

The indicator system of manufacturing purchasing managers’ survey covers 13 sub-indices such as production, new orders, export orders, existing orders, finished goods inventory, purchase, import, purchase price, producer price, raw materials inventory, employees, suppliers, delivery time, production and business activities expectation. Non-manufacturing purchasing managers survey involves 10 questions on production, new orders (business required), export, existing orders, finished goods inventory, intermediate input price, subscription price, employees, suppliers delivery time, and business activities expectation. The indicator system of non-manufacturing purchasing managers’ survey covers 10 sub-indices such as business activities, new orders, new export orders, existing orders, finished goods inventory, intermediate input price, subscription price, employees, suppliers delivery time, and business activities expectation. Sub-indices adopt diffusion index calculation method, i.e. percentage of positive answers in number of enterprises plus half of the percentage in the same answers. Due to the lack of synthesis of non-manufacturing integrated PMI index, the international society often used business activity index to reflect the overall changes in non-manufacturing economic development.

(2) Calculation Methods of Manufacturing PMI.

Manufacturing PMI was calculated according to five diffusion indices (group indices) and their weights. 5 group indices and their weights are determined in accordance with their leading impact on the economy. Specifically, new orders index weighted 30 percent; production index weighted 25 percent; employees index weighted 20 percent; supplier delivery time index weighted 15 percent; raw materials inventory index weighted 10 percent. Of which, the supplier delivery time index is a converse index, and contrary calculation is needed when combines it into PMI.

(3) Calculation Methods of Composite PMI Output Index. 

Composite PMI Output Index was calculated by weighted summation of the manufacturing output index and non-manufacturing business activity index. Their weights are determined by the proportion manufacturing and non-manufacturing industries in GDP. This index will be released since February 2018.

5. Seasonal adjustment

The purchasing managers’ survey is a monthly survey, the data of the survey fluctuates very much for the influences of seasonal factors. The released PMI composite index and sub-indices are seasonally adjusted data.