CN: General Services PMI

Wed Jan 03 19:45:00 CST 2018

Actual Previous
Composite - Level 53.0 51.6
Services - Level 53.9 51.9

The Caixin China General Services Business Activity Index rose from 51.9 in November to 53.9 in December, with the manufacturing PMI headline index, published earlier in the week, showing an increase from 50.8 to 51.5. Together these moves resulted in the composite index advancing from 51.6 in November to a year-high of 53.0 in December.

The increase in the service sector headline index in December coincided with the manufacturing sector's output index also advancing to its highest level since August. Service sector respondents reported new orders grew in December at the fastest pace since May 2015, while the manufacturing survey's measure of new orders also picked up, with the composite measure of new orders increasing to its highest level since January 2013. Both surveys also showed some improvement in employment growth but with little overall change in the composite measure. The composite measure of business confidence remained at a historically low level in December but advanced relative to November, with respondents in both sectors reporting improved sentiment.

Input costs were reported to have accelerated by service-sector respondents but to have moderated by manufacturers, with the composite measure unchanged from the level recorded in November. Meanwhile, the surveys indicates that the rate of increase in selling prices was flat in the services sector and slightly weaker in the manufacturing sector, resulting in a small fall in the composite measure.

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 December. Survey evidence about conditions in the manufacturing sector, however, were mixed in December as they were in November, with the strong increase in the Caixin manufacturing PMI headline index contrasting with a small decline in the official CFLP manufacturing PMI's headline index. Official activity data for December are scheduled for release mid-January.

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.