China's Non-manufacturing PMI Increased in August

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Department of Service Statistics of NBS

China Federation of Logistics and Purchasing (CFLP)

In August 2014, non-manufacturing purchasing manager index was 54.4 percent, increased 0.2 percentage points over the previous month, and 4.4 percentage points higher than the threshold.

In view of different industries, non-manufacturing purchasing manager index of service industry was 53.6 percent, up by 0.4 percentage points than that in the previous month. Of which, the indices of air transport, ecological protection, environmental control and management of public facilities, post, transport via railway, water transport were above the threshold, and the total enterprise business increased; the indices of resident services and repair, real estate, loading, unloading and portage, storage were below the threshold, and the total enterprise business decreased. Non-manufacturing purchasing manager index of construction industry achieved 57.7 percent, down by 0.5 percentage points over the previous month, indicating that the total enterprise business of construction industry continued to grow, while the growing rate decreased.

New orders index stayed at the threshold. The new orders index was 50.0 percent, down by 0.7 percentage points over the previous month. In view of different industries, the new orders index of service industry was 50.6 percent, slightly increased 0.1 percentage point over the previous month. Of which, the new orders indices of air transport, ecological protection, environmental control and management of public facilities, transport via railway, Internet, software and information technology services, renting and leasing activities and business services, telecommunications, broadcasting, television and satellite transmission services were above the threshold, and the market demands increased; while the new orders indices of resident services and repair, real estate, loading, unloading and portage, storage, restaurants, transport via road were below the threshold, and the market demands decreased. The new orders index of construction industry was 47.5 percent, decreased 4.1 percentage points over the previous month, and dropped below the threshold, the market demands decreased.

Intermediate input price index fell back, which reached 52.2 percent, down by 1.2 percentage points over last month, still higher than the threshold, indicating the intermediate input price during the process of production and operation of non-manufacturing enterprises continued to increase, with a narrowed growing rate. In view of different industries, the intermediate input price index of service industry was 52.5 percent, down by 1.1 percentage points over the previous month. Among the service industry, except that the intermediate input price index of wholesale was below the threshold, that of all the other industries were above the threshold. The intermediate input price index of construction industry was 51.0 percent, a decrease of 1.8 percentage points over the previous month, and had decreased for 2 consecutive months, indicating the overall growing rate of production and operation costs of construction industry narrowed.

The subscription price index went down. This index was 48.3 percent, 1.2 percentage points lower over last month, showing that the overall level of non-manufacturing subscription price decreased. In view of different industries, the subscription price index of service industry was 47.9 percent, a decrease of 1.6 percentage points over the previous month. Of which, the subscription price indices of air transport, renting and leasing activities and business services, transport via road were above the threshold; that of wholesale, real estate, water transport, Internet, software and information technology services were below the threshold. The subscription price index of construction industry was 50.0 percent, up by 0.3 percentage points over last month, stayed at the threshold, and the subscription price kept at the same level over last month.

Employment index increased slightly. This index was 49.6 percent, 0.3 percentage points higher over the previous month. In view of different industries, the employment index of service industry was 49.0 percent, a decrease of 0.3 percentage points over the previous month. Of which, the employment index of Internet, software and information technology services, air transport, transport via railway, telecommunications, broadcasting, television and satellite transmission services, ecological protection, environmental control and management of public facilities were above the threshold; while that of loading, unloading and portage, storage, water transport, accommodation, post were below the threshold. The employment index of construction industry was 51.8 percent, up by 2.3 percentage points over last month, and returned above the threshold.

Business activities expectation index dropped slightly. This index went down by 0.3 percentage points over last month, but still positioned in the high level of the range, which reached 61.2 percent, indicating that the non-manufacturing enterprises maintained optimistic about the operating expectation in next three months. In view of different industries, except for renting and leasing activities and business services, other industries all positioned in the expansion interval.

Annotations:

1. Explanatory Notes

China non-manufacturing purchasing manager index system constituted by 10 sub-indices, they are business activity index, new orders index, new export orders index in hand orders index, stock index, intermediate input price index, subscription price index, employment index, supplier delivery time index, and business activities expectation index. Due to the lack of synthesis of non-manufacturing integrated PMI index, the international society often used business activity index to reflect the overall changes in non-manufacturing economic development, A PMI reading above 50 percent indicates expansion from the previous month, while below indicates contraction.

2. Statistical Coverage

The survey involves 27 non-manufacturing industry categories in the “Industrial Classification for National Economic Activities" (GB/T4754-2011), and was conducted in 1200 sampling enterprises of the non-manufacturing sector countrywide.

3. Survey Methods

Non-manufacturing purchasing managers’ survey was conducted in PPS ( Probability Proportional to Size) sampling method, using the non-manufacturing sectors as the selecting layers, distribution of sample size was according to their value-added accounted for the proportion of total non-manufacturing value-added, and samples within layers and the main business revenue of the enterprises were selected by the PPS.

The survey was organized and conducted by staff members of survey offices, monthly through Online Reporting System of NBS by sending survey questionnaires to the purchasing managers of the selected enterprises.

4. Calculation Methods

Non-manufacturing purchasing managers survey involves 10 questions on production, new orders (business required), export, existing orders, finished goods inventory, intermediate input price, subscription price, employees, suppliers delivery time, and business activities expectation. Diffusion index was calculated on each question, i.e. percentage of positive answers in number of enterprises plus half of the percentage in the same answers.

5. Seasonal Adjustment Note

The purchasing manager’s survey is a monthly survey, great fluctuations of data which affected by seasonal factors. At present, time series of China's non-manufacturing PMI have met the technical requirements of the seasonally adjustment, and the sub-indices of non-manufacturing PMI data on seasonally adjusted will be released since March 2012.

(Source: National Statistics Bureau website)