CN: General Services PMI

Tue Apr 03 20:45:00 CDT 2018

Actual Previous
Composite - Level 51.8 53.3
Services - Level 52.3 54.2

The Caixin China General Services Business Activity Index fell from 54.2 in February to 52.3 in March, with the manufacturing PMI headline index, published earlier in the week, also showing a decline in its headline index from 51.6 to 51.0. Together this resulted in the composite index falling from 53.3 in February to a four-month low of 51.8 in March.

The decline in the service sector headline index in March reflects weaker growth in new orders, with a similar drop in new orders growth reported by manufacturers resulting in the composite measure falling to a six-month low. Both surveys also showed weaker employment growth in March, with service sector firms reporting only marginal growth in payrolls and manufacturers reporting a sharper drop. Whereas the service sector survey showed weaker confidence about the twelve-month outlook, the manufacturing survey showed greater optimism, with the composite measure increasing to a nine-month high.

Input costs were reported to have risen at a slower pace in March by both manufacturers and services-sector respondents, with the composite measure of input cost growth dropping to its lowest level since July. Both surveys however, showed slightly stronger increases in selling prices, resulting in the composite measure picking up slightly.

The fall in the Caixin service sector PMI headline index reported today contrasts with the official CFLP non-manufacturing PMI survey, which showed a small increase in its headline index in March. Survey evidence about conditions in the manufacturing sector were also mixed, with the drop in the Caixin manufacturing PMI headline index contrasting with a rebound in the official CFLP manufacturing PMI's headline index. Official activity data for March are scheduled for release mid-April.

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.