CN: PMI Composite

Tue Feb 03 19:45:00 CST 2015

Actual Previous
Composite - Level 51.0 51.4
Services - Level 51.8 53.4

January composite PMI which covers both manufacturing and services) signaled a further rise in total business activity in China. However, the rate of growth eased to the weakest in eight months, with a composite PMI reading of 51.0, down from 51.4 in December.

The slower expansion of output was largely driven by weaker growth of services activity, which hit a six-month low in January with a reading of 51.8, down from 53.4 in December. Anecdotal evidence suggested that activity levels rose in line with new business growth. Meanwhile, manufacturers reported the first expansion of output since last October, albeit only fractional.

In line with the trend for activity, new order growth at service providers also slowed, having eased further from November's two-and-a-half year peak. Reports from panelists mentioned that improving market conditions and a subsequent upturn in client demand helped to secure new work in January. New workloads meanwhile stabilized at manufacturing companies, following a fractional reduction in December. At the composite level, new business increased at a moderate pace that was the slowest since last May. Despite weaker growth of activity and new work, service providers continued to add to their staff numbers in January, amid reports of ongoing planned company expansions. Furthermore, the rate of job creation accelerated to the strongest in over a year-and-a-half. In contrast, manufacturing employment declined, albeit at the slowest rate in 15 months. As a result, workforce numbers increased marginally at the composite level.

The HSBC China Services PMI is based on data compiled from monthly replies to questionnaires sent to purchasing executives in over 400 private service sector companies. The panel has been carefully selected to accurately replicate the true structure of the services economy.

The HSBC China Composite PMI is a weighted average of the Manufacturing Output Index and the Services Business Activity Index, and is based on original survey data collected from a representative panel of over 800 companies based in the Chinese manufacturing and service sectors.

The PMIs have developed an outstanding reputation for providing the most up-to-date possible indication of what is really happening in the private sector economy by tracking variables such as sales, employment, inventories and prices. The indexes are widely used by businesses, governments and economic analysts in financial institutions to help better understand business conditions and guide corporate and investment strategy. In particular, central banks in many countries use the data to help make interest rate decisions. PMI surveys are the first indicators of economic conditions published each month and are therefore available well ahead of comparable data produced by government bodies.