CN: PMI Composite

Tue Aug 04 20:45:00 CDT 2015

Actual Previous
Composite - Level 50.2 50.6
Services - Level 53.8 51.8

China's July composite PMI which covers both manufacturing and services posted only fractionally above the neutral 50.0 mark at 50.2, down from 50.6 in June, and pointed to the weakest rate of expansion in 14 months. The slower rate of overall output expansion was predominantly driven by the manufacturing sector, which registered the quickest reduction of output since November 2011. This contrasted with a further increase in service sector business activity, where the rate of growth accelerated to an 11-month high of 53.8 in July, up from June's recent low of 51.8.

The stronger rise in service sector activity was supported by a further increase in new business volumes in July. Furthermore, the rate of new order growth accelerated to a solid pace that was the second-fastest in eight months. Employment at service sector companies continued to increase in July, with a number of surveyed companies attributing growth to planned company expansions. Moreover, the rate of job creation picked up slightly since June. However, staff numbers continued to decline at manufacturing firms, albeit at a slower pace than in the previous month. At the composite level, employment declined for the second month in a row, though only marginally.

Average input costs continued to rise at service providers in July. Although the rate of input price inflation picked up slightly since June, the rate of increase remained slower than the series average. However, a sharp decline in cost burdens faced by manufacturers led to a modest reduction in input prices at the composite level in July.

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.