China’s Purchasing Managers Index (PMI) was jointly released by the Service Research Center of the National Bureau of Statistics (NBS) and China Federation of Logistics & Purchasing (CFLP) on January 1, 2017. In this regard, Mr. Zhao Qinghe, the said center’s senior statistician, made the interpretations listed as follows.
I. Manufacturing PMI continues to expand
In December, the manufacturing PMI was 51.4%, 0.3 percentage slightly lower than the previous month, but it was still the secondary high in the year, 1.1 percentage points higher than the annual level, and was above the critical point for five consecutive months, mainly showing the characteristics of the following five aspects. First, the production and market demand maintained steady growth, and the supply-demand relationship was further improved. The production index was 53.3%, down from the previous month by 0.6 percentage points, and was one of the main reasons for the slight decline of PMI, but was still the secondary high in the year; the new orders index was 53.2%, remaining unchanged from the previous month, the highest point for two consecutive months in a year, the D-value between such an index and the production index fell to a three-year low, showing a relatively stable balance between production and demand. Second, the role of a new impetus stimulating manufacturing has been strengthened. The PMI of high-tech manufacturing and equipment manufacturing was 53.8% and 52.0% respectively, continued to be higher than the overall level of the manufacturing sector, and the hi-tech manufacturing PMI in particular hit a new high this year. Three, a part of the consumer goods industry grew fast. With the New Year and Spring Festival holidays approaching, the industries closely related to consumption, including the food, alcohol, beverage and refining tea manufacturing industries, tobacco industries, pharmaceutical industry, and automotive industry, have achieved rapid expansions, with PMI registered at 53.0% and above. Four, imports and exports maintained a slight expansion. The new export orders index and import index were 50.1% and 50.3% respectively, staying in the expansion range for two consecutive months. Five, under the impact of hazy weather conditions, some regions intensified their environmental pollution control efforts, and some enterprises cut or limited their production. The high energy manufacturing PMI was 49.8%, back to the contraction range. Among which, the PMI of black metal smelting and rolling processing industry was 46.3%, down by 3.5 percentage points, falling sharply.
It is noteworthy that, recently, prices of important means of production and logistic costs in some distribution fields have continued to rise, exerting a certain impact upon the enterprise production and operations. This month, the purchase price index of raw materials was 69.6%, rising for six consecutive months to a high over recent years. Meanwhile, the enterprise proportion reflecting rising transportation cost rose for five consecutive years, the pressure on enterprise operational costs continued to increase, squeezing a certain profit margin.
In terms of enterprise scales, the PMI of large enterprises was 53.2%, down 0.2 percentage points from the previous month, but still above the critical point, serving as the main support for the smooth operation of the manufacturing sector; the PMI of medium-sized enterprises was 49.6%, down f by 0.5 percentage points rom the previous month, below the critical point and; the PMI of small businesses was 47.2%, down 0.2 percentage points from the previous month, fell for two consecutive months and continued to be in the contraction range. The survey results show that the proportion of small businesses that reflect tight funding was close to 60%, up to the highest point since this year, exhibiting that financing difficulties and costliness are still one of the major difficulties plaguing the production and operations of small businesses.
II. Non-manufacturing PMI continued to show the trend of expansion
In December, PMI of China’s non-manufacturing was 54.5%, down slightly from the previous month by 0.2 percentage points, the second highest point in the year, and 0.8 percentage points higher than the annual level, continuing to maintain a rapid expansion.
The service industry continues to grow, but its expansion has slowed. Its business activity index registered 53.2%, down from the previous month by 0.5 percentage points, but still 0.5 percentage points higher than the annual level. Among which, the business activity indexes of the industries, including railway transportation, air transportation, postal, radio, television and satellite transmission services, Internet and software IT services, monetary and financial services, insurance, leasing and business services, were all located in the high boom range above 55.0%, with rapid growth in total business volumes. The business activity index of the industries, including road transport, water transport, catering, capital market services, real estate, residential services and repair business, was below the critical point, with decreased total business volumes. And in particular, the realty industry business activity index continued to decline in the contraction range, the effect of the real estate market regulation policy has therefore emerged. In addition, the service input price and sales price indexes were 54.9% and 51.4%, respectively, an increase from the previous month by 2.4 and 0.3 percentage points, with an increased D-value between the said two indexes, and some corporate profits have decreased.
The construction industry continued to maintain a rapid expansion. Its business activity index registered 61.9%, up from the previous month by 1.5 percentage points, and 2.1 percentage points higher than the annual level. From the perspective of market demand, the new orders index was 59.2%, 4.1 percentage points higher than the previous month, as a high point in the year, showing that the construction industry continues to maintain a strong expansion momentum.