CN: General Services PMI

Sun Feb 04 19:45:00 CST 2018

Actual Previous
Composite - Level 53.7 53.0
Services - Level 54.7 53.9

The Caixin China General Services Business Activity Index rose from 53.9 in December to 54.7 in January, its highest level since May 2012, with the manufacturing PMI headline index, published last week, unchanged at 51.5. Together this resulted in the composite index advancing from 53.0 in December to a seven-year high of 53.7 in January.

The increase in the service sector headline index in January reflects an acceleration in reported growth in new orders to a near three-year high. Manufacturers, however, reported modest growth in new orders in January, with the composite measure little changed from the December level. This divergence was also evident in the two surveys' measures of employment growth, with respondents reporting stronger job gains in the services sector but job shedding in the manufacturing sector at the fastest pace in nearly three years. Conversely, service sector firms were slightly less optimistic about the twelve-month outlook in January, whereas manufacturers reported some improvement in their confidence.

Input costs were reported by services-sector respondents to have risen at their fastest pace since April 2012, where manufacturers reported weaker growth in input costs, with the composite measure also moderating. Meanwhile, both surveys showed weaker increases in selling prices, resulting in the composite measure falling to a five-month low.

The advance in the Caixin service sector PMI headline index reported today is consistent with the official CFLP non-manufacturing PMI survey, which showed a third consecutive increase in its headline index in January to the highest level since September. Survey evidence about conditions in the manufacturing sector were again mixed, with the steady Caixin manufacturing PMI headline index contrasting with a second consecutive decline in the official CFLP manufacturing PMI's headline index. Official activity data for January are scheduled for release mid-February.

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.