CN: PMI Composite

Tue Mar 03 19:45:00 CST 2015

Actual Previous
Composite - Level 51.8 51.0
Services - Level 52.0 51.8

HSBC China composite data (which covers both manufacturing and services) pointed to a further increase in Chinese business activity in February, thereby extending the current trend to 10 months. Though modest, the rate of expansion quickened to a five-month high, with the HSBC composite output index posting at 51.8 in February, up from January's recent low of 51.0.

Stronger growth of total business activity was supported by faster increases in output across both the manufacturing and service sectors in February. Manufacturing output increased at the quickest rate since last August, while services activity growth picked up slightly since January's six-month low. The latter was highlighted by the HSBC China services business activity index registering at 52.0 in February, up from 51.8 at the start of the year.

Latest survey data also signalled stronger growth of new business across both monitored sectors in February. Chinese service providers saw a solid increase in new work, with the rate of increase accelerating from January's recent low. Anecdotal evidence mentioned that new projects and stronger underlying client demand had boosted new work intakes. Meanwhile, new orders rose modestly across China's manufacturing sector. As a result, new business expanded at the quickest rate since last November at the composite level.

The solid rise in new work supported a further expansion of Chinese service sector employment in February. That said, the rate of job creation eased since January's 19-month peak to a modest pace. In contrast, manufacturing companies continued to cut their staff, albeit at the slowest rate in the current 16-month sequence. At the composite level, employment rose marginally for the third month in a row.

February data signalled divergent trends with regard to unfinished workloads, with backlogs falling at service providers but rising at manufacturers. Yet outstanding business declined only slightly in the service sector, offsetting a slight increase at the start of the year. Overall, backlogs of work rose marginally at the composite level.

Service sector cost burdens rose solidly over the month, with the rate of inflation picking up to a four-month high in February. In contrast, manufacturers continued to benefit from the recent fall in global oil prices, and signalled a further sharp reduction in average input costs. At the composite level, input prices fell moderately.

Average selling prices set by service providers rose marginally in February, offsetting a slight reduction at the start of the year. Meanwhile, prices charged by manufacturers continued to decline, albeit at a weaker rate.

Chinese service sector companies remained optimistic towards future activity growth in February. That said, the degree of overall positive sentiment weakened slightly since January's 10-month peak.

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.