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China's Manufacturing PMI in September Is Equal to That in the Prior Month and Non-manufacturing Business Activity Index Slightly Rallies in the Meantime

Submit Time:16-11-2016 | Zoom In | Zoom Out

Author:Zhao Qinghe | Source:National Bureau of Statistics

Abstract:

On October 1, 2016, the Service Industry Investigation Center of National Bureau of Statistics and China Federation of Logistics & Purchasing jointly released purchasing managers' indexes (PMI) of China's manufacturing industry and non-manufacturing industries. Furthermore, Zhao Qinghe, senior statistician of Service Industry Investigation Center of National Bureau of Statistics, elucidated such both indexes.   

I. Manufacturing PMI equivalent to that in the prior month   

The manufacturing PMI in September was 50.4%, as same as that in the prior month. It maintained an upward trend, indicating steady growth in production and demands and showing a sign of development towards stability. There were following four characteristics in operation in September. First, production kept steady growth. The production index was 52.8%, rising by 0.2 percentage point month on month and keeping a growth trend for two consecutive months. Thanks to the revival of production, the purchasing price of raw materials came to a new high of 57.5% over the past five months and was 0.3 percentage point higher than that of the prior month. Second, the market demand saw a slight fluctuation but continued an expansion trend. The new orders index has been in an expansion period for several months in a row. Although it slightly declined by 0.4 percentage point month on month, reached 50.9% or the second highest point over the past five months. Third, the high-tech and equipment manufacturing sectors retained relatively fast development. The PMI of such both sectors were 52.4% and 51.9% and 2.0 and 1.5 percentage points higher than that of the total manufacturing respectively. The PMI of pharmaceutical sector, auto manufacturing, railway, shipbuilding and space equipment manufacturing sector, computer communication and other electronic equipment manufacturing sectors were all above 52.0%. Meanwhile, the new orders indexes of both high-tech and equipment manufacturing sectors were higher than 53.0%, and are anticipated to keep constant growth in the future. Fourth, both import and export industries saw growth and returned to the expansion stage. The new orders index for export was 50.1%, up 0.4 percentage point month on month and reaching above the critical point. The import index was 50.4%, up 0.9 percentage point month on month and being the highest in this year.   

It is noticeable that the manufacturers stay mired in a quandary, face heavy tasks of addressing overcapacity, and lack a stable foundation for constant growth. First, the price of raw materials and transportation costs has been seen increase for two consecutive months and the enterprises still have to address pressure of cost reduction. Second, the manufacturing industry is still under structural adjustment, with traditional industries having more prominent overcapacity issues, and pressures to address such overcapacity. Furthermore, in September, the new orders indexes of nonmetal minerals manufacturing and ferrous metal melting, rolling and processing saw dramatic reduction, and future production may be further lessened, having some impacts on the overall production of manufacturing.   

In terms of sizes of enterprises, the PMI of large enterprises was 52.6%, up 0.8 percentage point month on month, and continued being higher than the critical point, so they are the mainstay of the smooth development trend of manufacturing PMI; that of medium-sized enterprises was 48.2%, down 0.7 percentage point month on month, and remained lower than the critical point; and the PMI of small enterprises was 46.1%, down 1.3 percentage point month on month, and still lied in the phase of contraction.   

II. Non-manufacturing business activity index slightly rebounding   

In September, China's non-manufacturing business activity index was 53.7%, up 0.2 percentage point month on month, and continued being higher than 53.0% for seven consecutive months in a row; the business activity index is expected to be 61.1%, up 1.7 percentage point month on month, and reaches a new high this year. It is indicated that the non-manufacturing retains a development trend of rising steadily and enterprises' confidence is further consolidated.   

The service industry continues a smooth and steady growth trend. The business activity index was 52.3%, down 0.4 percentage point month on month and remained under the critical point, staying in the booming phase of 52.0-53.0%. Among the service industry, the business activity indexes of postal and express delivery services, retailing, hotel service, telecommunication, Internet software, banking and other sectors were higher than 55.0%, indicting relatively fast growth of the total volume of business and being the main force driving economic development of the service industry. Meanwhile, the business activity indexes of the transportation, catering service, securities sector, social service and others were lower than the critical point, showing a slight drop in the total volume of business. The new orders index of the service industry was 50.6%, up 1.0 percentage point month on month and coming back to the expansion phase. Therefore, the market demand was rising and the service industry was expected to keep relatively fast growth.

The booming degree of the construction industry dramatically rebounded. With reduction of scorching temperature and rainfall, the construction industry entered the busy production period and ran faster. The business activity index of construction industry was 61.9%, up 3.7 percentage point month on month and being in the extraordinary booming phase. And the business activity indexes of outdoor operation of house construction and civil engineering were 62.4% and 61.8%, up 3.2 and 7.1 percentage points month on month respectively. The business activity index of the construction industry is expected to be 65.9%, up 2.7 percentage point month on month. Construction enterprises held an optimistic attitude toward future development.  


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