PMI 2017

II. Non-manufacturing Purchasing Managers’ Index

In December 2017, China's non-manufacturing purchasing managers’ index was 55.0 percent, an increase of 0.2 percentage points from the previous month, and continued to be higher than the threshold. The expansion of non-manufacturing industry has been sped up.

In terms of different industries, the non-manufacturing purchasing managers’  index of the service industry was 53.4 percent, a slight decrease of 0.2 percentage points from the previous month. The non-manufacturing purchasing managers’ index of the construction industry achieved 63.9 percent, an increase of 2.5 percentage points from the previous month, and stayed in the high level of the range which above 60.0 percent for two consecutive months. The production and operation of construction industry accelerated.

The new orders index was 52.0 percent, up by 0.2 percentage points from the previous month, and was above the threshold, indicating that the growth rate of non-manufacturing industry’s market demand increased.

The input price index was 54.8 percent, down by 1.4 percentage points from the previous month, but was above the threshold, indicating that the input price during the process of non-manufacturing enterprises’ operating activities continued to increase, while the amount of increase narrowed.

The sales price index was 52.6 percent, down by 0.2 percentage points from last month, and was above the threshold, indicating that the amount of increase of non-manufacturing sales prices declined slightly.

The employment index was 49.3 percent, a slight increase of 0.1 percentage points from the previous month, but was still lower than the threshold, indicating that the pace of decline of non-manufacturing enterprises’ labor employment reduced.

The business activities expectation index was 60.9 percent, a decrease of 0.7 percentage points from last month, and continued to be in the high level of the range which above 60.0 percent.

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.