PMI 2016

II. Non-manufacturing Purchasing Managers’ Index

In December 2016, China's non-manufacturing purchasing managers’ index was 54.5 percent, a decrease of 0.2 percentage points over the previous month, and hit this year’s second highest. The non-manufacturing industry continued a rapid growth momentum.

In terms of different industries, the non-manufacturing purchasing managers’ index of service industry was 53.2 percent, a decrease of 0.5 percentage points over the previous month, but still higher than the annual average. The non-manufacturing purchasing managers’ index of construction industry achieved 61.9 percent, an increase of 1.5 percentage points over the previous month, with the construction industry continuing to keep rapid expansion.

The new orders index was 52.1 percent, up by 0.3 percentage points over the previous month, rising for two consecutive months, indicating that the  expansion has picked up pace.

The input price index was 56.2 percent, up by 2.7 percentage points from last month, and reached this year’s highest, indicating that the input price during the process of production and operation of non-manufacturing enterprises continued to increase, and the amount of increase enlarged.

The sales price index was 51.9 percent, 0.5 percentage points higher than last month, still above the threshold, indicating that the overall level of non-manufacturing sales price continued to increase, and the amount of increase extended.

The employment index was 50.0 percent, a decrease of 0.6 percentage points over the previous month, and was at the threshold, indicating that the labor employment of non-manufacturing enterprises was unchanged compared with last month.

The business activities expectation index was 59.5 percent, 1.2 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.