Caixin China General Manufacturing PMI (Eng

Caixin Purchasing Managers' Index™
Embargoed until: 09:45 (Beijing Time) February 1st 2016
Caixin China General Manufacturing PMI™
Manufacturing sector downturn extends into 2016
Key findings:
■ Operating conditions continue to deteriorate at a modest pace
■ Output and employment both contract at faster rates...
■ ...but new orders decline at softest pace in seven months
Chinese manufacturers signalled a modest deterioration in
operating conditions at the start of 2016, with both output
and employment declining at slightly faster rates than in
December. Total new business meanwhile fell at the weakest
rate in seven months, and despite a faster decline in new
export work. Nonetheless, lower production requirements
led companies to cut back on their purchasing activity and
inventories of inputs. On the prices front, both input costs
and output charges fell again in January, though at the
weakest rates in seven months.
At 48.4 in January, the seasonally adjusted Purchasing
Managers’ Index™ (PMI™) – a composite indicator
designed to provide a single-figure snapshot of operating
conditions in the manufacturing economy – remained below
the crucial 50.0 value separating growth from contraction for
the eleventh successive month. The reading was up slightly
from 48.2 in December, and signalled a further modest
deterioration in the overall health of China’s manufacturing
sector.
Production at Chinese goods producers fell for the
second successive month in January. Though modest, the
rate of contraction was the fastest seen in four months.
According to panellists, relatively weak market conditions
and fewer new orders had led firms to cut production.
This was highlighted by a further fall in total new business
placed at Chinese manufacturers at the start of 2016. That
said, the rate of contraction was the slowest seen in seven
months, despite a quicker decline in new export work.
Latest data signalled a further decline in Chinese
manufacturing employment, with the rate of job shedding
quickening to a four-month record in January. Panellists
that registered lower staff numbers generally attributed this
to company down-sizing policies and the non-replacement
of voluntary leavers as workloads were insufficient.
Meanwhile, backlogs of work increased for the ninth month
in a row in January, albeit only slightly.
Reflective of lower output requirements, goods
producers cut their purchasing activity again at the start
of 2016. That said, the rate of reduction was the slowest
seen in the current seven-month sequence of decline.
This in turn contributed to a further modest fall in stocks of
inputs in January. Meanwhile, disappointing sales led to a
slight accumulation of inventories of finished goods for the
second month in a row.
Average supplier performance deteriorated for the first
time in three months in January. However, the degree to
which lead times increased was only marginal.
Weaker client demand led manufacturers to discount
their prices charged again in January, thereby extending
the current sequence of deflation to 18 months (although
the rate of reduction was the slowest seen since June
2015). Lower selling prices were supported by a further fall
in average input costs at the start of the year. In line with the
trend for charges, the rate of decline eased to the weakest
in seven months. Lower cost burdens were generally linked
to reduced raw material prices.
Caixin China General Manufacturing Purchasing Managers’ Index™ (PMI™)
50 = no change on previous month, S.Adj.
Increasing rate of growth
60
55
50
45
40
Increasing rate of contraction
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
About Caixin:
Caixin Media is China’s leading media group dedicated to providing financial and business news through periodicals, online content, mobile applications, conferences, books and TV/video
programs.
Caixin Insight Group is a high-end financial data and analysis platform. The group encompasses the monthly Caixin China Purchasing Managers’ Index™, components of which include the
Caixin China General Manufacturing PMI™ and Caixin China Geneal Services PMI™. These indexes are closely watched worldwide as reliable snapshots of China’s economic health.
For more information, please visit www.caixin.com.
The intellectual property rights to the Caixin China General Manufacturing PMI™ provided herein are owned by or licensed to Markit. Any unauthorised use, including but not limited to
copying, distributing, transmitting or otherwise of any data appearing is not permitted without Markit’s prior consent. Markit shall not have any liability, duty or obligation for or relating to
the content or information (“data”) contained herein, any errors, inaccuracies, omissions or delays in the data, or for any actions taken in reliance thereon. In no event shall Markit be liable
for any special, incidental, or consequential damages, arising out of the use of the data. Purchasing Managers’ Index™ and PMI™ are either registered trade marks of Markit Economics
Limited or licensed to Markit Economics Limited. Caixin use the above marks under license. Markit is a registered trade mark of Markit Group Limited.
Caixin China General Manufacturing PMI™
Output Index
Q. Please compare your production/output this month with the situation one month ago.
Latest survey data signalled a second successive monthly fall in
Chinese manufacturing output at the start of 2016. The rate of
contraction quickened to a pace that, though modest, was the fastest
seen since last September. Companies that cut production generally
linked this to relatively weak market conditions and fewer new
orders.
50 = no change on previous month, S.Adj.
Increasing rate of growth
65
60
55
50
45
40
35
Increasing rate of contraction
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
New Orders Index
Q. Please compare the state of your new orders (in units) this month with one month ago.
Adjusted for seasonality, the New Orders Index signalled a reduced
amount of new business placed at Chinese goods producers in
January. That said, the rate of decline was the slowest seen in the
current seven-month sequence of falling new work. Anecdotal evidence
suggested that softer client demand predominantly stemmed from
relatively poor market conditions.
50 = no change on previous month, S.Adj.
Increasing rate of growth
65
60
55
50
45
40
Increasing rate of contraction
35
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
New Export Orders Index
Q. Please compare the state of your new export orders (in units) this month with one month ago.
Manufacturing companies based in China signalled a second
successive monthly drop in the level of new export orders placed
at their units in January. After adjusting for seasonality, the rate of
reduction accelerated slightly to a solid pace. More than 13% of
panellists noted fewer new orders from abroad (against just over 3%
that saw a rise), with a number of companies linking the decline to
weaker foreign client demand.
50 = no change on previous month, S.Adj.
Increasing rate of growth
65
60
55
50
45
40
35
30
25
Increasing rate of contraction
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Backlogs of Work Index
Q. Please compare the level of outstanding business in your company this month with one month ago.
The seasonally adjusted Backlogs of Work Index remained above the
neutral 50.0 mark in January and signalled a further accumulation of
outstanding business across China's manufacturing sector. That said,
the rate of growth eased to a marginal pace that was the weakest
since May 2015.
50 = no change on previous month, S.Adj.
65
Increasing rate of growth
60
55
50
45
40
Increasing rate of contraction
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
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February 1st 2016
Stocks of Finished Goods Index
Q. Please compare your stocks of finished goods (in units) this month with the situation one month ago.
Inventories of completed goods held at Chinese manufacturing
companies increased in January. Stocks of post-production goods
have now accumulated in five of the past six months. After adjusting
for seasonal factors, however, the rate of expansion was littlechanged from December and only slight. Higher stock levels were
partly attributed by panellists to fewer than expected sales.
50 = no change on previous month, S.Adj.
55
Increasing rate of growth
50
45
40
Increasing rate of contraction
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Employment Index
Q. Please compare the level of employment at your unit this month with the situation one month ago.
January data pointed to a further decline in Chinese manufacturing
employment, thereby extending the current period of job shedding to
27 months. The pace of reduction quickened slightly since December
to the strongest seen in four months. According to panellists, a
combination of company down-sizing policies and the non-replacement
of voluntary leavers led to lower employment.
50 = no change on previous month, S.Adj.
Increasing rate of growth
60
55
50
45
40
Increasing rate of contraction
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Output Prices Index
Q. Please compare the average price that you charge per unit of output (volume weighted) this month with the situation one month ago.
Chinese goods producers continued to cut their prices charged at the
start of the year. Average selling prices have now fallen in each of the
past 18 months. That said, the latest reduction was the slowest since
June 2015 and moderate overall. Anecdotal evidence mentioned that
price discounting strategies were implemented due to greater market
competition, and were in turn supported by lower input costs.
50 = no change on previous month, S.Adj.
Increasing rate of inflation
70
65
60
55
50
45
40
35
30
Increasing rate of deflation
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Input Prices Index
Q. Please compare the average price of your purchases (volume weighted) this month with the situation one month ago.
As has been the case in each month since August 2014, average cost
burdens declined across China's manufacturing sector in January.
Despite easing to the lowest in seven months, the rate of deflation was
solid overall. Companies that reported lower cost burdens generally
attributed the fall to reduced raw material prices.
50 = no change on previous month, S.Adj.
Increasing rate of inflation
90
70
50
30
10
Increasing rate of deflation
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
February 1st 2016
Suppliers’ Delivery Times Index
Q. Please compare your suppliers’ delivery times (volume weighted) this month with one month ago.
Following a two-month sequence of slight improvements, vendor
performance deteriorated during January. That said, the rate of
deterioration was only marginal, with the seasonally adjusted
Suppliers' Delivery Times Index posting slightly below the neutral 50.0
value. Furthermore, the vast majority of panellists (nearly 94%) saw
no change to lead times at the start of the year.
50 = no change on previous month, S.Adj.
55
Increasing rate of shortening
50
45
40
Increasing rate of lengthening
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Quantity of Purchases Index
Q. Please compare the quantity of items purchased (in units) this month with the situation one month ago.
Chinese goods producers continued to cut back on their input buying
at the start of 2016. However, the latest reduction was the slowest
seen in the current seven-month sequence and only marginal. Fewer
new orders and lower production requirements were cited as the
main factors leading to lower purchasing activity in the latest survey
period.
50 = no change on previous month, S.Adj.
65
Increasing rate of growth
60
55
50
45
40
35
Increasing rate of contraction
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Stocks of Purchases Index
Q. Please compare your stocks of purchases (in units) this month with the situation one month ago.
Adjusted for seasonal factors, the Stocks of Purchases Index signalled
a modest decline in stocks of inputs held at manufacturing companies
in China. Inventories have now fallen at a modest pace in each of the
past seven months. Reduced stocks were linked by panellists to a
combination of lower purchasing activity and stock control policies.
50 = no change on previous month, S.Adj.
60
Increasing rate of growth
55
50
45
40
35
Increasing rate of contraction
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Notes on Data and Survey Methodology
The Caixin China General Manufacturing PMI™ is based on data compiled from monthly replies to questionnaires sent to purchasing executives in around 420 industrial
companies. The panel is stratified by company size and by Standard Industrial Classification (SIC) group, based on industry contribution to Chinese GDP.
Survey responses reflect the change, if any, in the current month compared to the previous month based on data collected mid-month. For each of the indicators the ‘Report’ shows
the percentage reporting each response, the net difference between the number of higher/better responses and lower/worse responses, and the ‘diffusion’ index. This index is the
sum of the positive responses plus a half of those responding ‘the same’.
Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change. An index reading above 50 indicates
an overall increase in that variable, below 50 an overall decrease. Historical data relating to the underlying (unadjusted) numbers and seasonally adjusted series are available to
subscribers from Markit. Please contact [email protected].
The Purchasing Managers’ Index™ (PMI™) is a composite index based on five of the individual indexes with the following weights: New Orders - 0.3, Output - 0.25, Employment
- 0.2, Suppliers’ Delivery Times - 0.15, Stock of Items Purchased - 0.1, with the Delivery Times index inverted so that it moves in a comparable direction. The PMI is designed to
show a convenient single-figure summary of the health of the manufacturing sector.
Markit Economics
Purchasing Managers’ Index™ (PMI™) surveys are now available for over 30 countries and also for key regions including the Eurozone. They are the most closely-watched business
surveys in the world, favoured by central banks, financial markets and business decision makers for their ability to provide up-to-date, accurate and often unique monthly indicators
of economic trends. To learn more go to www.markit.com/economics. Copies of the report are available on annual subscription from Markit. For subscription details please contact:
[email protected]
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