PMI 2015

II. Non-manufacturing Purchasing Managers’ Index

In December 2015, the non-manufacturing purchasing managers’ index was 54.4 percent, an increase of 0.8 percentage points over the previous month. It registered a peak this year, and the expansion incentives were strong.

In terms of different industries, the non-manufacturing purchasing managers’  index of the service industry was 53.7 percent, an increase of 0.9 percentage points over the previous month, and  the result of two consecutive months of increases. The non-manufacturing purchasing managers’ index of the construction industry achieved 58.3 percent, up by 0.2 percentage points over the previous month, with production continuing to maintain rapid growth.

The new orders index was 51.7 percent, up by 1.5 percentage points over the previous month, indicating that the market demand of non-manufacturing industry increased.

The input price index was 49.0 percent, down by 0.3 percentage points from last month, indicating that the input price during the process of production and operation of non-manufacturing enterprises continued to decrease.

The sales price index was 48.2 percent, 0.5 percentage points higher than last month, and was still below the threshold, indicating that the overall level of non-manufacturing sales prices continued to drop, while the pace of decline narrowed.

The employment index was 48.9 percent, an increase of 0.5 percentage points over the previous month, indicating that the labor employment of non-manufacturing enterprises continued to decrease, while the pace of decline narrowed.

The business activities expectation index was 58.3 percent, 1.7 percentage points lower than last month, but was still positioned in the high level of the range.

Notes:

1. The Purchasing Managers’ Index (PMI) is an index summarized and compiled through the results of a monthly survey of enterprises’ purchasing managers. It covers every link of the enterprises, including purchasing, production, logistics, and so on.

It is one of the leading indices which is commonly adopted by international societies to monitor macroeconomic trends, and plays an important role in forecasting and monitoring. The threshold of the PMI usually uses 50 percent as the cut-off point for economic performance. If the PMI is above 50 percent, it reflects that the manufacturing economy is expanding; if it’s less than 50 percent, it reflects that the manufacturing economy is in recession.

2. China’s non-manufacturing purchasing managers’ index system is constituted of 10 sub-indices. They are the business activity index, new orders index, new export orders index, in hand orders index, stock index, input price index, sales price index, employment index, supplier delivery time index, and business activities expectation index.

Due to the lack of synthesis of the non-manufacturing integrated PMI index, international societies often use the business activity index to reflect the overall changes in non-manufacturing economic development. A PMI reading above 50 percent indicates expansion from the previous month, while below indicates contraction.