CN: PMI Composite

Tue May 05 20:45:00 CDT 2015

Actual Previous
Composite - Level 51.3 51.8
Services - Level 52.9 52.3

HSBC China Composite PMI, which covers both manufacturing and services, indicated an expansion of Chinese business activity in April but at a weaker pace. Activity growth slowed to a three month low with a reading of 51.3, down from 51.8 in March. The slower expansion of total business activity was largely driven by a stagnation of manufacturing output in April, following three months of growth.

Service sector activity increased solidly over the month for the strongest expansion of business activity at service providers in four months with a reading of 52.9, up from 52.3 in March. The latest survey data signaled that new order trends continued to differ between manufacturers and service providers, with new business falling at manufacturers for the second month in a row but rising again at services companies. As was the case for business activity, the rate of service sector new order growth accelerated from the previous month and was solid. Nonetheless, the weaker performance of the manufacturing sector led to the slowest expansion of new work at the composite level for 11 months.

While manufacturing companies reported further job shedding in April, service sector firms raised their staff numbers for the twentieth successive month. That said, the rate of job creation at service providers remained modest overall, despite having quickened slightly from March's 10-month low. At the composite level, employment fell slightly for the second consecutive month.

Backlogs of work declined across both the manufacturing and service sectors in April. It was the first time that outstanding business had fallen at manufacturers since May 2014. Meanwhile, Chinese service providers have now seen backlogs fall for the last three months, with a number of firms mentioning increased efforts to reduce the level of work-in-hand for incoming new business. Consequently, outstanding work fell modestly at the composite level.

Average input costs fell sharply at manufacturing companies during April, but continued to increase at service providers. That said, the rate of service sector input price inflation eased to a marginal rate that was well below the series average. At the composite level, average cost burdens declined at the quickest rate since January. April survey data indicated similar trends with regard to output prices, with both manufacturers and service providers reducing their selling prices over the month.

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.