China's Non-manufacturing PMI Decreased in July

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Department of Service Statistics of NBS

China Federation of Logistics and Purchasing (CFLP)

In July 2014, non-manufacturing purchasing manager index was 54.2 percent, decreased 0.8 percentage points over the previous month, still 4.2 percentage points higher than the threshold.

In view of different industries, non-manufacturing purchasing manager index of service industry was 53.2 percent, down by 0.3 percentage points than that in the previous month. Of which, the indices of aviation transport service, loading, unloading and portage, storage, transport via railway, ecological protection, environmental control and management of public facilities, public facilities management, renting and leasing activities and business services positioned in the high level of the range which above 60 percent, and the total enterprise business increased rapidly; resident services and repair, retail trade, restaurants, real estate were below the threshold, and the total enterprise business decreased. Non-manufacturing purchasing manager index of construction industry achieved 58.2 percent, down by 2.4 percentage points over the previous month, indicating that the total enterprise business of construction industry continued to grow, but the amplitude decreased.

New orders index remained at the same level month-on-month. The new orders index was 50.7 percent, remained at the same level month-on-month. In view of different industries, the new orders index of service industry was 50.5 percent, 0.1 percentage point lower over the previous month. Of which, the new orders indices of aviation transport service, ecological protection, environmental control and management of public facilities, public facilities management, rental, and business service, transport via railway, 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, retail trade, restaurants, real estate, wholesale were below the threshold, and the market demands decreased. The new orders index of construction industry was 51.6 percent, decreased 0.6 percentage points over the previous month, indicating that the market demands of construction industry continued to increase, while the growth slowed.

Intermediate input price index declined, which reached 53.4 percent, down by 2.6 percentage points over last month, still above the threshold, indicating the intermediate input price during the process of production and operation of non-manufacturing enterprises increased, while the growth slowed. In view of different industries, the intermediate input price index of service industry was 53.6 percent, down by 2.9 percentage points over the previous month. Of which, the subscription price indices of renting and leasing activities and business services, post, restaurants, accommodation, resident services and repair, positioned above the threshold, and the overall level of intermediate input price of enterprises increased rapidly. The subscription price indices of transport via water, wholesale, ecological protection, environmental control and management of public facilities, public facilities management, were below the threshold. The intermediate input price index of construction industry was 52.8 percent, a decrease of 1.1 percentage points over the previous month, indicating the growth of production and operation costs of construction industry narrowed.

The subscription price index was below the threshold. This index was 49.5 percent, 1.3 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 49.5 percent, a decrease of 1.6 percentage points over the previous month. Of which, the subscription price indices of aviation transport service, renting and leasing activities and business services, ecological protection, environmental control and management of public facilities, transport via road, loading, unloading and portage, storage, internet, software information technology services were above the threshold. Of which, the subscription price indices of wholesale, transport via water, retail trade, real estate were below the threshold. The subscription price index of construction industry was 49.7 percent, remained at the same level over last month, lower than the threshold for 3 consecutive months, and the subscription price decreased, with a narrowed decreasing amplitude.

Business activities expectation index increased. This index was 61.5 percent, 1.1 percentage points higher over last month, but still positioned in the high level of the range, indicating that the non-manufacturing enterprises continued to maintain optimistic about the operating expectation in next three months. In view of different industries, except for resident services and repair, 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 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 manufacturing sectors as the selecting layers, distribution of sample size was according to their value-added accounted for the proportion of total 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.