CN: General Services PMI

Mon Dec 04 19:45:00 CST 2017

Actual Previous
Composite - Level 51.6 51.0
Services - Level 51.9 51.2

The Caixin China General Services Business Activity Index rose from 51.2 in October to 51.9 in November, with the manufacturing PMI headline index, published last week, showing a modest decline from 51.0 to 50.8. Together these moves resulted in the composite index advancing from a 16-month low of 51.0 in October to 51.6 in November.

The increase in the service sector headline index in November coincided with the manufacturing sector's output index also advancing relative to October but remaining at a relatively subdued level. Service sector respondents reported stronger growth in new orders in November, whereas the manufacturing survey's measure of new orders weakened. This contrast between the two surveys was also evident in the employment measures, with service sector payrolls reported to have risen at a faster pace in November but manufacturers reporting they shed staff at the fastest pace in three months. The composite measure of business confidence deteriorated in November, with increased optimism among service sector firms outweighed by weaker sentiment among manufacturers.

Both surveys suggest input costs grew at a faster pace in November, but higher material costs meant that the rate of growth was more marked in the manufacturing sector. Service sector firms reported a faster but still modest increase in selling prices, while manufacturers also reported a solid increase.

The increase in the Caixin service sector PMI headline index reported today is consistent with the official CFLP non-manufacturing PMI survey, which also showed an increase in its headline index in October. Survey evidence about conditions in the manufacturing sector, however, remain mixed, with the fall in the Caixin manufacturing PMI headline index in November contrasting with an advance in the official CFLP manufacturing PMI's headline index. Official activity data for November are scheduled for release mid-December.

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.