PMI 2019

III. Composite PMI Output Index

In December 2019, the comprehensive PMI output index was 53.4 percent, 0.3 percentage point lower than that of last month, and continued to be above the threshold, indicating that the overall production and operation activities of Chinese enterprises kept expanding.

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.

3. The Composite PMI Output Index, belonging to the PMI indicator system, is a composite index reflecting the changes in the output of the entire industry (manufacturing and non-manufacturing industries) in the current period.