In May, China's Manufacturing PMI Was 50.8 Percent

In May, China's manufacturing purchasing managers index (PMI) was 50.8 percent, up by 0.2 percentage point month-on-month.

In view of the sizes of enterprises, the PMI of large-sized enterprises was 51.1 percent, up by 0.1 percentage point month-on-month; that of medium-sized enterprises was 51.4 percent, up by 0.7 percentage point month-on-month; that of small-sized enterprises was 47.3 percent, down by 0.3 percentage point month-on-month.

In term of different areas, the PMI of eastern region and north-eastern region were 51.7 and 51.4 percent respectively, 0.9 and 0.6 percentage point higher than that of national level, and stayed above the threshold; that of central region and western region were 49.3 and 49.1 percent respectively, 1.5 and 1.7 percentage points lower than that of national level, and stayed below the threshold. 

In May, among the five sub-indices composing PMI, three sub-indices increased, one sub-index kept at the same level, while that of the other one sub-index decreased.

Production index was 53.3 percent, increased 0.7 percentage point month-on-month, and was the main driving force to enhance PMI this month. In view of different industries, the production indices of 16 industries including manufacture of electrical machinery and equipment, manufacture of computer, communication equipment and other electronic equipment and manufacture of measuring instrument and meter, manufacture of railway locomotives, building of ships and boats, manufacture of air and spacecrafts and other transportation equipments, manufacture of general-purpose machinery, manufacture of chemical fibers and manufacture of rubber and plastics products etc. were above the threshold, and the production increased. The production indices of 5 industries including manufacture of motor vehicles, processing of food from agricultural products, manufacture of special-purpose machinery, manufacture of chemical raw material and chemical products etc. were below the threshold, and the production decreased.

New orders index was above the threshold, which was 51.8 percent, slightly increased 0.1 percentage point month-on-month. In view of different industries, the new orders indices of 13 industries including manufacture of electrical machinery and equipment, manufacture of computer, communication equipment and other electronic equipment and manufacture of measuring instrument and meter, manufacture of cigarettes and tobacco, manufacture of chemical fibers and manufacture of rubber and plastics products, manufacture of fabricated metal products etc. were above the threshold, and the market demand increased. The new orders index of processing of timbers and manufacture of furniture stayed at the threshold, and the product order quantity changed little compared with the previous month. The new orders indices of 7 industries including manufacture of motor vehicles, manufacture and processing of ferrous metals, manufacture of chemical raw material and chemical products etc. were below the threshold, and the market demand dropped back. The survey results showed that foreign new orders index which reflects the situation of foreign trade of manufacturing was 49.4 percent, increased 0.8 percentage point month-on-month, but still below the threshold; the import index was 50.3 percent, increased 1.6 percentage points month-on-month, and above the threshold.

Main raw materials inventory index was 47.6 percent, increased 0.1 percentage point over last month, and stayed below the threshold for four consecutive months. In view of different industries, the main raw materials inventory indices of 4 industries including manufacture of textile wearing apparel and ornament, manufacture of computer, communication equipment and other electronic equipment and manufacture of measuring instrument and meter, manufacture of chemical fibers and manufacture of rubber and plastics products, manufacture of cigarettes and tobacco were above the threshold, and the main raw materials inventory increased; the indices of 17 industries including processing of timbers and manufacture of furniture, processing of food from agricultural products, manufacture and processing of ferrous metals, manufacture of chemical raw material  and chemical products etc. were below the threshold, and the main raw materials inventory decreased.

Employed person index was 48.8 percent, decreased 0.2 percentage point month-on-month. In view of different industries, the employed person indices of 4 industries including manufacture of computer, communication equipment and other electronic equipment and manufacture of measuring instrument and meter, manufacture of chemical fibers and manufacture of rubber and plastics products, manufacture of electrical machinery and equipment, manufacture of non-metallic mineral products were above the threshold, and the employment increased. The employed person indices of 17 industries including manufacture of railway locomotives, building of ships and boats, manufacture of air and spacecrafts and other transportation equipments, manufacture of cigarettes and tobacco, manufacture and processing of ferrous metals, manufacture of chemical raw material  and chemical products etc. were below the threshold, and the employment decreased in various degrees.

Supplier delivery time index was 50.8 percent, kept at the same level over last month, and stayed above the threshold for three consecutive months.

Main raw material purchase price index was 45.1 percent, an increase of 5.0 percentage points month-on-month, but still significantly below the threshold. In view of different industries, the main raw material purchase price indices of 8 industries including manufacture of food, wines, beverage and refined tea, processing of food from agricultural products, manufacture of cigarettes and tobacco, manufacture of textile wearing apparel and ornament etc. were above the threshold, and the purchase cost of enterprises increased; that of 13 industries including manufacture and processing of ferrous metals, processing of petroleum and coking, manufacture of fabricated metal products, manufacture of chemical raw material  and chemical products etc. were below the threshold. 

Production and business activities expectation index was 56.3 percent, down by 3.0 percentage points over last month, indicating that a lower proportion of manufacturing enterprises were optimistic for the production and business activities expectation within the next three months.

China's manufacturing PMI (Seasonally adjusted)

Annotations:

1. Explanatory Notes

Purchasing Managers Index (PMI) is an index summarized and compiled through the results of the monthly survey of enterprises purchasing managers. It covers every links of the enterprises, including purchasing, production, logistics, and so on. It is one of the leading indices which was commonly adopted by international society to monitor the macroeconomic trends, and played an important role in forecasting and monitoring. The threshold of PMI is usually using 50 percent as the cut-off point for economic performance. If PMI above 50 percent, it reflects the manufacturing economy is expanding; if less than 50 percent, it reflects the manufacturing economy is in recession.

2.Statistical Coverage

The survey involves 31 divisions of manufacturing sector in the “Industrial Classification for National Economic Activities” (GB/T4754-2011). The survey sample was expanded from 820 to 3000 since January 2013. Due to the small sample size and lack of representativeness, some industries have been merged according to the similar homogeneity of industry, and there are 21 industries after merging.

3. Survey Methods

PPS (Probability Proportional to Size) sampling method was adopted in manufacturing purchasing managers’ survey. Using the divisions of the manufacturing sector as the selecting strata, the sample size of each division is proportional to its proportion of the value-added of the division to the total value-added of the manufacturing sector. Within the stratum, the samples are selected according to the probabilities proportional to their principal business revenues of the enterprises.

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

The questionnaire of manufacturing purchasing managers survey covers 12 questions related to production, new orders, export orders, existing orders, finished goods inventory, purchase, import, purchase prices, raw materials, inventory, employees, suppliers, delivery time, production and business activities expectation and etc.. Diffusion index was calculated for each question, i.e. percentage of positive answers in number of enterprises plus half of the percentage in the same answers.

PMI is a composite index, which was calculated according to five diffusion indices (group indices) and their weights. 5 group indices and their weights are determined in accordance with their leading impact on the economy. Specifically, new orders index weighted 30 percent; production index weighted 25 percent; employees index weighted 20 percent; supplier delivery time index weighted 15 percent; raw materials inventory index weighted 10 percent. Of which, the supplier delivery time index is a converse index, and contrary calculation is needed when combines it into PMI.

5. Classification of Eastern, Central and Western Regions

Eastern regions including Beijing, Tianjin, Hebei, Shanghai, Jiangsu, Zhejiang, Fujian, Shandong, Guangdong, Hainan; central regions including Shanxi, Anhui, Jiangxi, Henan, Hubei, Hunan; western regions including Inner Mongolia, Guangxi, Chongqing, Sichuan, Guizhou, Yunnan, Tibet, Shaanxi, Gansu, Qinghai, Ningxia, Xinjiang; north-eastern regions including Liaoning, Jilin, Heilongjiang.

6. Seasonal adjustment

The purchasing managers’ survey is a monthly survey, the data of the survey fluctuates very much for the influences of seasonal factors. The released PMI composite index and sub-indices are seasonally adjusted data.