And indexes of non-manufacturing business activity continued to remain above the tipping point
— Zhao Qinghe, the senior statistician at the Service Industry Survey Center of the National Bureau of Statistics, explaining the China Purchasing Managers Index for July 2020
The China Purchasing Managers Index was released by the Service Industry Survey Center of the National Bureau of Statistics and The China Federation of Logistics and Purchasing on July 31, 2020. To this, Zhao Qinghe of senior statistician of the service industry of the national bureau of Statistics undertakes understanding reads.
With the overall coordination of epidemic prevention and development policies, China’s economic recovery has been sustained, and business operations have been improving. In July, China’s PURCHASING managers’ index continued to run steadily, with the manufacturing purchasing managers’ index at 51.1 percent, up 0.2 percentage points from the previous month. The non-manufacturing business activity index and composite PMI output index were 54.2 percent and 54.1 percent respectively, slightly lower than the previous month’s 0.2 and 0.1 percentage points.
1. The manufacturing purchasing managers’ index has been above the critical point for five consecutive months
In July, the MANUFACTURING PMI came in at 51.1 percent, continuing a steady, upward trend of the previous month. Of the 21 sectors surveyed, 17 were above the critical point, three more than the previous month. Main Features of this month:
First, production is generally picked up. The production index was 54.0%, up slightly from 0.1 percentage points in the previous month. In terms of industry conditions, except for chemical fiber and rubber and plastic products, the production index of the other 20 industries was all above the critical point, among which the production index of textile, clothing, wood processing, and other manufacturing industries rose above the critical point for the first time since the epidemic. Companies stepped up purchases to meet production needs, and the purchasing volume index picked up significantly this month to 52.4 percent, up from 0.6 percent in the previous month.
Second, demand is gradually picking up. The new orders index rose for the third straight month to 51.7%, up 0.3 percentage points from the previous month. From the perspective of the industry, the index of new orders in the paper and printing, electrical and mechanical equipment, computer communication and electronic equipment, and other manufacturing industries rose continuously above the critical point, and the recovery momentum of the industry continued to strengthen.
Third, the import and export situation continued to improve. As the world’s major economies gradually relaxed quarantine measures to restore economic activity, and a series of measures to stabilize foreign trade came into effect, the import and export of the manufacturing industry picked up. The new export orders index and import index for this month were 48.4% and 49.1% respectively, up from 5.8 and 2.1 percentage points in the previous month.
Fourth, the main raw material purchase price index rose to the recent high. The purchasing price index and factory gate price index for major raw materials rose and fell from the previous month to 58.1% and 52.2% respectively. Affected by the recovery of demand from downstream industries, the price of upstream products has increased significantly. The purchasing price index of major raw materials in petroleum processing, steel, non-ferrous metals, and other manufacturing industries has all been higher than 63.0%, and the factory price index has all been higher than 58.0%.
Fifth, businesses expect further improvement. The expected index of production and business activity was 57.8 percent, up from 0.3 percentage points in the previous month, and companies remained optimistic about the recent recovery in the industry. From the perspective of the industry, the expected indexes of production and operation activities in the food and beverage refined tea, medicine, electrical and mechanical equipment, and other manufacturing industries are all higher than 60.0%, and the labor demand of the above industries has increased month-on-month, and the employee indexes are all above 51.0%.
The survey results also showed that the PMI of small businesses was 48.6% this month, down 0.3 percentage points from the previous month, and remained below the critical point. The production index and the new orders indexes were 49.8% and 46.8% respectively, and the supply and demand of small businesses continued to be under pressure. In addition, some enterprises in Anhui, Hubei, Hunan, Jiangxi, and other places reported that the flood disaster caused logistics and transportation to be impeded, resulting in problems such as flooding of plant, equipment, and inventory, which affected their production and operation to some extent.
2. The index of non-manufacturing business activity continues to remain above the critical point
In July, the non-manufacturing business activity index stood at 54.2%, down slightly by 0.2 percentage points from the previous month and remaining above the critical point.
The service sector continues to recover. The index of business activity in the service sector was 53.1 percent, down 0.3 percentage points from the previous month and still above the critical point. From the perspective of the industry, the business activity index of postal express, accommodation, catering, telecommunications, securities, and other industries was higher than that of last month, and the total business volume increased. Residents service this month and the end of the cultural and sports entertainment business activity index for five months of contraction movements, rose to 51.1% and 51.9%, respectively, 1.9 and 6.1% higher than last month, showed that in the near future across a series of policy effect to promote consumption, the prophase is seriously affected by the outbreak of clustering, contact service industry to speed up the recovery.
The construction sector rebounded. Construction projects were accelerated, and the construction volume maintained rapid growth. The business activity index of the construction industry was 60.5%, up from 0.7 percentage points last month, of which the business activity index of the civil engineering industry was 62.5%, up from 3.2 percentage points last month. From the perspective of labor demand and market expectations, the construction industry employment index and business activity expectation index are 56.2% and 66.3%, respectively, remaining above 55.0% and 65.0% for four consecutive months.
3. The comprehensive PMI output index ran smoothly
In July, the composite PMI output index stood at 54.1 percent, slightly lower than 0.1 percentage points in the previous month, indicating that Chinese enterprises have maintained the momentum of recovery in production and operation. The manufacturing production index and the non-manufacturing business activity index, which make up the composite PMI output index, were 54.0% and 54.2%, respectively, rising and falling from the previous month.
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