CN: General Services PMI

Thu Nov 02 20:45:00 CDT 2017

Actual Previous
Composite - Level 51.0 51.4
Services - Level 51.2 50.6

The Caixin China General Services Business Activity Index rose from 50.6 in September to 51.4 in October. The manufacturing PMI headline index, published earlier in the month, was unchanged at 51.0 in October. This resulted in the composite index declining from 51.4 in September to 51.0 in October.

The increase in in the service sector headline index in October contrasts with signs of weaker growth in the manufacturing sector. Respondents in both sectors reported a modest increase in new orders. The manufacturing survey showed less optimism about the twelve-month outlook, while the services survey showed a small improvement in confidence, with the composite measure dropping its lowest levels since July. The composite measure of employment growth was steady on the month, with moderate job losses in the manufacturing sector broadly offset by modest hiring in the services sector.

The two surveys suggest that profit margins have tightened more in the manufacturing sector. Manufacturers reported the sharpest increase in input costs since early 2011 but a weaker increase in selling prices. Service sector firms, in contrast, reported a moderate increase in input costs and the biggest increase in selling prices since mid-2015. At the composite level, input costs and selling prices were relatively steady in October.

Chinese PMI surveys have continued to provide mixed signals about the strength of economic conditions. The increase in the Caixin service sector PMI headline index reported today contrasts with the official CFLP non-manufacturing PMI survey, which showed a drop in its headline index in October. Meanwhile, no change in the Caixin manufacturing PMI headline index in October also contrasts with a decline in the official CFLP manufacturing PMI's headline index. Official activity data for October are scheduled for release mid-November.

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.