CN: General Services PMI

Tue Jan 05 19:45:00 CST 2016

Composite - Level 49.4
Services - Level 50.2

The headline China general services PMI for December was 50.2, down 1 point from the reading for the previous month and the lowest point in 17 months. The composite output index reading was 49.4, below the 50-point breakeven level and 1.1 points lower than the month before.

The composite PMI signaled reduced business activity in China in December, with the headline composite output index indicating contraction at 49.4. This was down from 50.5 in November. Overall business activity has now fallen in four of the past five months.

December data pointed to divergent sector trends, with business activity rising further at service sector companies while a renewed contraction of output was seen at manufacturers. However, the rate of service sector activity growth eased to a fractional pace, with the general services business activity index posting just over the no-change 50.0 mark at 50.2 in December, down from 51.2 in the previous month. Furthermore, this was the second-lowest index reading since the series began in November 2005 (behind July 2014).

Relatively subdued client demand was reported across both monitored sectors in December. This was highlighted by only a marginal increase in new work at service providers that was one of the weakest seen in the series history. New business meanwhile fell at manufacturing companies for the sixth month running and at a moderate pace. As a result, new orders declined for the second successive month at the composite level.

The Caixin 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 Caixin 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.