PMI in Chinese manufacture in October: 50.1

chiny24.com 8 months ago

According to the latest data from the State Statistical Office (chin. 国家统计局) industrial production in China increased in October for the first time since April.
This is long awaited, good news, for all those who conflict to increase the activity of the second largest economy in the world. In October, the manufacture activity/contribution rate (PMI) was 50.1points erstwhile it was 49.8points in September.
As we look at the size of companies, this is confirmed by the trend. Large enterprises (51.5) start joining the average (49.4). Unfortunately, tiny enterprises stay stagnant (47,5 points).

Sub-indexes consisting of an PMI indicator indicate that:
the production index is at 52.0 points, which means an increase of 0.8 points compared to the erstwhile month, indicating that the production activity of the companies is accelerating;
the index of fresh orders was 50.0 points, which means an increase of 0.1 points and indicates entry to the level of activity;
the stock index of natural materials in October increased to 48,2 (0.5 more than in September), indicating a continuous decline in stocks;
the employment index has increased to 48.4 points (by 0.2), which means improving industrial employment, although the labour marketplace situation is inactive far from satisfactory;
the transportation time index was 49.6 points (up by 0.1), but is inactive below the level of activity (50%).

As far as sectors are concerned, construction (50.4) and services (50.1) are in the improvement zone. Sectors specified as rail, water, air, postal services, capital market, environmental protection, public utility management and another PMI indicators show the economical phase. On the another hand, wholesale trade, hotels, net software and IT services, real property and housing services stay stagnant, with PMI below the critical point (50 points).
October data proved superior to analyst forecasts, which is simply a affirmative signal. However, comparatively low interior consumption, a persistent real property crisis and rising public debt stay a threat.
For respective weeks now, the government has been introducing a series of measures to channel financial stimulus into the economy, gradually laxing monetary and fiscal policies to improve growth dynamics. The PMI confirms that the steps taken are starting to produce first results. Nevertheless, many experts and investors are inactive awaiting an authoritative announcement of a larger economical stimulus package than before.

PMI, Purchasing Managers’ Index, is an indicator of financial activity created by Markit Group and Institute for Supply Management of Financial Activity. It reflects activity of managers acquiring various types of goods and services.

The main PMI index is simply a weighted average of individual sub-indexes (production, fresh orders, employment, etc.) and can take values from 0 to 100. This indicator usually takes a value between 40 and 60 points. Values higher than 50 points signal an increase in economical activity in the sector concerned, and below 50 points indicate a decrease in economical activity in the sector concerned.

The data needed to get the indicator are collected through anonymous surveys, filled out by managers from various economical fields. The calculation of PMI shall take into account, inter alia: