• China Manufacturing PMI for March was 56.1%, rising 3 percentage points from last month.
• Output, New Orders, Purchases of Inputs Indices rose above 60%.
• Input Prices Index climbed to the highest in the recent 7 months.
According to the China Federation of Logistics and Purchasing (CFLP), the China Manufacturing PMI in March 2007 was 56.1%, gaining 3 percentage points from the previous month. The PMI has stayed above 50% since January 2005.
The market picked up momentum this month, as companies stepped up production. All indices of the China Manufacturing PMI displayed an upward trend, the most apparent gains being Output, New Export Orders, Backlog of Orders and Imports Indices, all having risen more than 4 percentage points. Based on companies’ responses, capital shortage and rising raw material prices have been the most pronounced problems in their business operations, and an increasing proportion of companies have reverted with the same feedback. The problem of transportation shortages appeared to have come off; however, there were companies which have responded that the weight-based transportation charges have resulted in increase of transportation costs.
According to Zhang Liqun, our contributing analyst, “when I analysed February’s PMI, taking into consideration the effects of the macro-control policies in the 2nd half of 2006, I predicted a possible slowdown of the future economic growth. However, the reality says otherwise, which shows that the foundation and conditions for economic growth are sound and well in place. March PMI further substantiates this. Looking at the current situation, there is a greater likelihood that economic growth will stabilise at a high level, which means that no marked rebound or dip is expected.”
Except for “Beverage”, 19 of the 20 industries recorded PMIs greater than 50%, within which, “General Machinery”, “Electrical Machinery & Equipment”, “Metal Products”, “Transport Equipment” and “Garment, Footwear & Related Products” were 5 industries whose PMIs were greater than 60%. Based on the registration status of enterprises, there was no marked difference between the indices for “State-owned Enterprises”, “Limited Liability Corporations”, “Shareholding Corporations Ltd” and “Foreign-invested Enterprises”, which were between 54% and 56.8%. By region, the indices for the Western and Eastern regions were higher, at 57.9% and 56.8% respectively; the central region was slightly lower, at 53.4%. Based on the three major economic zones, the Yangtze River Delta saw the highest index, at 58.2%; indices for the Pearl River Delta and the Bohai Sea region were close, the respective indices being 55.3% and 55%. By end-use category, the index was the highest for “Producer goods”, at 60.3%; and indices for the remaining three categories were close, at between 53.8% and 56.1%.
Output Index
Output Index for March 2007 was 60.7%, 4.1 percentage points higher than the previous month. Among the 20 industries, only “Beverage” was lower than 50%. Within the remaining 19 industries, 9 were higher than 60%, led by “General Machinery” and “Wood Processing & Furniture” whose indices surpassed the 70% mark. By region, the indices for the Eastern and Western Regions exceeded 60%, at 61.6% and 63.8% respectively; the index for the Central region was slightly lower, at 56.8%. Based on the three major economic zones, the index for the Yangtze River Delta was the highest, at 63.5%, followed by the Pearl River Delta, at 60.4%; the lowest being the Bohai Sea region, at 58.6%. By end-use category, “Producer goods” returned with the highest index, at 67%, whereas the remaining three categories were close, at between 58.4% and 60.2%.
New Orders Index
The New Orders Index for March 2007 was 60.8%, gaining 3.7 percentage points from the previous month, the highest in the past 6 months. Among the 20 industries, only the index for “Beverage” was lower than 50%. Within the remaining 19 industries, 10 industries, including “Electrical Machinery & Equipment”, “Transport Equipment”, “Garment, Footwear & Related Products” etc., registered indices that are greater than 60%. By region, the indices for the Eastern and Western regions were greater than 60%, at 61.7% and 63.8% respectively; the Central region was lower, at 56.9%. Based on the three major economic zones, the index for the Yangtze River Delta was the highest, at 62.6%, whereas the indices for the Bohai Sea region and the Pearl River Delta were both at 59.8%. By end-use category, the index for “Producer goods” was the highest, at 66.8%; next were “Consumer goods” and “Intermediate goods”, the indices of which were close, at 60.6% and 60.4% respectively; the index for “Raw materials & energy” was slightly lower, at 57.2%.
New Export Orders Index
The New Export Orders Index for March 2007 was 61.5%, leaping 8.5 percentage points from the previous month. “Oil Refining & Coking” and “Beverage” were the only 2 industries whose indices were lower than 50%. Among the 18 industries whose indices were greater than 50%, 12 were greater than 60%, with “Electrical Machinery & Equipment” recording an index as high as 73%. By region, the Eastern Region recorded the highest index, at 62.7%; negligible difference was observed between the indices of the Central and Western regions, which were at 58.9% and 59.4% respectively. Based on the three major economic zones, the index for the Yangtze River Delta was the highest, at 63.6%; indices for the Pearl River Delta and the Bohai Sea region were close, at 61.2% and 60.5%. By end-use category, the indices for “Intermediate goods”, “Consumer goods” and “Producer goods” exceeded 60%, at between 60% and 65.5%; “Raw materials & energy” were slightly lower, at 54.9%.
Backlog of Orders Index
The Backlog of Orders Index for March 2007 was 55.1%, rising 6 percentage points from the previous month. Among the 20 industries, 15 recorded indices greater than 50%, within which, 4 industries, namely “Metal Products’, “General Machinery”, “Specialised Machinery” and “Electrical Machinery & Equipment” saw their indices greater than 60%. “Garment, Footwear & Related Products”, “Papermaking, Printing, Stationeries & Sporting goods”, “Smelting of Non-ferrous Metals”, “Beverage” and “Wood Processing & Furniture” were 5 industries whose indices were lower than 50%. By region, the Eastern region recorded the highest index, at 56.6%, followed by the Central region, at 52.8%; the lowest being the Western region, at 51.7%. Based on the three major economic zones, the index of the Bohai Sea region was the highest for, at 58.4%; the indices for the Yangtze River Delta and Pearl River Delta regions were close, at 55.2% and 53.3% respectively. By end-use category, “Producer goods” performed best, with an index of 62.2%; next was “Intermediate goods”, at 58%; the indices for “Raw materials & energy” and “Consumer goods” were lower, at 50.9% and 52.4% respectively.
Stocks of Finished Goods Index
The Stocks of Finished Goods Index for March 2007 was 45.8%, an increase of 1.8 percentage points from the previous month. This index has been staying under the 50% level since January 2005. By industry, of the 20 industries, 4 industries, namely “Metal Products”, “Textile”, “Oil Refining & Coking” and “Chemicals” saw their indices greater than 50%. Of the remaining 16 industries whose indices were lower than 50%, “Food”, “Chemical Fibre, Rubber & Plastics” and “Specialised Machinery” were 3 industries which registered the lowest indices, at below 40%. By region, the index for the Western region was the lowest, at 42.8%; indices for the Eastern and Central regions were close, at 46% and 46.9%. Based on the three major economic zones, the indices for all three economic zones were lower than 50%, at between 45.8% and 47%. By end-use category, “Producer goods” returned with the lowest index, at 42.7%; next was “Consumer goods”, at 44.1%; the indices for “Raw materials & energy” and “Intermediate goods” were slightly higher, at 48.1% and 48.5% respectively.
Purchases of Inputs Index
The Purchases of Inputs Index for March 2007 was 60.5%, rising 2.9 percentage points from the previous month. Among the 20 industries, only “Beverage” returned with an index lower than 50%. Within the remaining 19 industries whose indices were higher than 50%, 10 recorded indices higher than 60%, within which, “Electrical Machinery & Equipment ” and “Transport Equipment” saw their indices higher than 70%. By region, the indices for the Eastern and Western regions were higher, exceeding 61%; the Central region was slightly lower, at 56.4%. Based on the three major economic zones, the index for the Pearl River Delta was the highest, at 67.6%, followed by the Yangtze River Delta, at 62.4%; the lowest being the Bohai Sea region, at 59.1%. By end-use category, the indices for both “Producer goods” and “Consumer goods” were higher than 60%, at 66.5% and 62.2% respectively; indices for “Intermediate goods” and “Raw materials & energy” were lower, at 58.4% and 55.1% respectively. 
Imports Index
Imports Index for March 2007 was 56.4%, an increase of 4.8 percentage points from the previous month. Among the 20 industries, 17 saw their indices higher than 50%, within which, 6 industries, namely “General Machinery”, “Papermaking, Printing, Stationeries & Sporting goods”, “Wood Processing & Furniture”, “Oil Refining & Coking”, “Electrical Machinery & Equipment” and “Specialised Machinery” recorded indices higher than 60%. The 3 industries whose indices were lower than 50% were “Beverage”, “Chemical Fibre, Rubber & Plastics” and “Non-metal Minerals”. By region, the index for the Eastern region was the highest, at 57.8%; the indices for the Central and Western regions were close, at 53.6% and 53.5%. Based on the three major economic zones, the indices for the Pearl river Delta and Yangtze River Delta were highest, at above 60%, being 62% and 61.3% respectively; the index for the Bohai Sea region was the lowest, at 51.1%, slightly above the 50% critical level. By end-use category, the indices for “Producer goods” and “Consumer goods” were higher, at 59.5% and 59.2% respectively; indices for “Intermediate goods” and “Raw materials & energy” were lower, at 53% and 52.7% respectively.
Input Prices Index
The Input Prices Index for March was 58.3%, 2.4 percentage higher than the previous month. The index has been rising for 3 consecutive months since the beginning of this year. By industry, among the 20 industries, only the indices of “Chemical Fibre, Rubber & Plastics” and “Communication, IT & Electronics Equipment” were lower than 50%. Of the remaining 18 industries, 8, led by “Smelting of Ferrous Metals” and “General Machinery”, exceeded 60%; in particular “Smelting of Ferrous Metals” was as high as 73.3%. By region, the indices of the Western and Central regions exceeded 60%, at 64.3% and 60.9% respectively; the Eastern Region was lower, at 56.2%. In line with the lower indices of the Eastern Region, the indices of the three major economic zones were generally lower than the average, the Yangtze River Delta being the highest, at 57.8%, followed by the Bohai Sea region, at 55.7%; the index for the Pearl River Delta was the lowest, at 51.5%. By end-use category, “Raw materials & energy” and “Producer goods” performed best, at above 60%, being 62.2% and 60.4% respectively; “Intermediate goods” and “Consumer goods” were slightly lower, at 58.8% and 55.5% respectively.
Stocks of Major Inputs Index
The Stocks of Major Inputs Index for March 2007 was 50.8%, rising 3.4% from the previous month. By industry, the indices of 8 industries, namely “Metal Product”, “Tobacco”, “General Machinery”, “Textile”, “Communication, IT & Electronics Equipment”, “Electrical Machinery & Equipment”, “Specialised Machinery” and “Chemicals” were higher than 50%, the highest being “Metal Products”, whose index was 64.9%. Among the remaining industries whose indices were lower than 50%, “Smelting of Ferrous Metals” was the lowest, at 40%. By region, the indices of the Eastern and Western regions were higher than 50%, at 50.4% and 55.5%; index of the Central Region was lower than 50%, at 49.3%. Based on the three major economic zones, the index for the Yangtze River Delta was higher than 50%, at 53.2%; both indices for the Pearl River Delta and the Bohai Sea regions were lower than 50%, at 49.2% and 48.5% respectively. By end-use category, the indices for “Producer goods” and “Consumer goods” were higher than 50%, at 56.7% and 51.1%; the indices for “Intermediate goods” and “Raw materials & energy” were lower than 50%, at 49.4% and 47.6% respectively.
Employment Index
The Employment Index for March 2007 was 51.9%, 3.4 percentage points higher than the previous month. Among the 20 industries, the indices of 14 industries were higher than 50%, the leaders being “Electrical Machinery & Equipment” and “Garment, Footwear & Related Products”, whose indices exceeded 60%, at 61.4% and 60.5%. “Oil Refining & Coking”, “Chemical Fibre, Rubber & Plastics”, “Smelting of Ferrous Metals”, “Food”, “Beverage” and “Tobacco” were 6 industries whose indices were lower than 50%. BY region, all three key regions saw their indices higher than 50%, ranging between 50.2% and 52.7%. Based on the three major economic zones, the indices for the Yangtze River Delta, Bohai Sea region, and Pearl River Delta were 54.6%, 52.4% and 50.1%, in descending order. By end-use category, the indices for “Intermediate goods”, “Consumer goods” and “Producer goods” were higher than 50%, at between 51.7% and 53.9%; the index for “Raw Materials & Energy” was lower than 50%.
Suppliers’ Delivery Time Index
The Suppliers’ Delivery Time Index for March 2007 was 51.7%, gaining 1.1 percentage points from the previous month. By industry, among the 20 industries, the indices for 11 industries, including “Food”, “Garment, Footwear & Related Products” and “Electrical Machinery & Equipment” were higher than 50%. The remaining 9 industries, including “Wood Processing & Furniture”, “Papermaking, Printing, Stationeries & Sporting goods” and “Oil Refining & Coking” returned with indices lower than 50%. By region, the index for the Western Region was the highest, at 54.2%; indices for the Central and Eastern regions were close, at slightly higher than 51%. Based on the three major economic zones, the index for the Bohai Sea region was the highest, at 52.5%; next was the Yangtze River Delta, at 51.2%; the index for the Pearl River Delta was the lowest, at 50.5%. By end-use category, the index was the highest for “Consumer goods”, at 53.3%, whereas those of the remaining three categories were slightly higher than 50%.
Products in short supply:
Coal, tyres, timber, tobacco etc.
Products with rising prices:
Coal, Crude oil, pig iron, selected steel products, stainless steel, steel scraps, copper, copper products, tin, pure alkali, rubber, scrap paper, cotton, tobacco etc.
Products with declining prices:
Aluminium, copper, copper products, methanol, hydrochloric acid, salt, polyester, soybean oil etc.
Products whose prices have been reported rising by some companies and declining by others:
Copper, copper products.
