CN: General Services PMI

January 4, 2017 07:45 CST

Consensus Actual Previous
Services - Level 53.3 53.4 53.1
Composite - Level 53.5 52.9

The Caixin China General Services Business Activity Index rose to 53.4 in December from 53.1 in November, a 17-month high and just above the consensus forecast of 53.3. The Caixin China Composite PMI headline index, which covers both the manufacturing and services sectors, rose to 53.5 from 52.9. The manufacturing PMI headline index, published earlier this week, rose to 51.9 in December from 50.9 in November.

Service sector respondents also reported new orders grew at their fastest pace in 17 months in December, broadly in line with the manufacturing survey. The surveys suggest, however, that employment weakened slightly in December, with service sector respondents reporting a smaller increase in their payrolls and manufacturers reporting modest job shedding.

Both surveys showed stronger increases in input costs in December, with respondents reporting costs rose at their fastest pace in nearly two years in the services sector and at the fastest pace since early 2013 in the manufacturing sector. Manufacturers also reported they were able to pass on higher costs with a sharp increase in selling prices, but firms in the services sector reported little change in their selling prices.

The December PMI surveys together show there has been further improvement in business conditions across both sectors. The quarterly average of the headline index for both the manufacturing and service PMI Survey I'm the three months to December are also well above the levels seen in the three months to September, suggesting GDP growth may also accelerate in the corner. For now, however, these signs of stronger growth have yet to translate into job gains, while officials may also be wary about recent increases in both input costs and selling prices.

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.