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CFLP China Manufacturing PMI Business Report May 2007

    • China Manufacturing PMI for May was 55.7%, losing 2.9 percentage points from last month.
    • Output, New Orders, and Input Prices Indices were higher, maintaining above 60%.
    • Input Prices Index has continued to rise since early this year and achieved a two-year record high.  

    According to the China Federation of Logistics and Purchasing (CFLP), the China Manufacturing PMI in May 2007 was 55.7%, losing 2.9 percentage points from the previous month. The PMI has stayed above 50% since January 2005.

    Among the indices of the current month’s China Manufacturing PMI, only Stocks of Finished Goods Index and Stock of Major Inputs Index were lower than 50%, the remaining indices were greater than 50%; in particular, Output, New Orders and Input Prices Indices were above 60%. Except for the continued rise of the Input Prices Index, indices exhibit a declining trend compared to the previous month, the most apparent being Output, New Orders, New Export Orders, Purchases of Inputs and Imports Indices, which lost more than 4 percentage points.


    According to Zhang Liqun, our contributing analyst, “the accelerated economic growth experienced during the first quarter was mainly driven by the surge of exports of steel and non-ferrous metals before the enforcement of the relevant policies. Since April, with the enforcement of the Lianggao Yizi (energy-intensive, highly-polluting and resource-processing type of products) policy which restrains the exports of Liangao Yizi products, the export-rush subsided, and industrial growth softened. On the demand side, currently the investment growth is steady, and consumption active, with overall growth remaining stable, and export steady. With a relatively steady demand growth, the economic growth will stabilise at a high level. The changes exhibited in May’s PMI attest to this conclusion. Due to the steady demand growth and strong supply capacity, price levels are not expected to soar. The increase of the Input Prices Index requires further analysis and observation.”

     

    Among the 20 industries, except for “Oil Refining & Coking” and “Tobacco”, the remaining 18 industries recorded PMIs that are greater than 50%, within which, “Electrical Machinery & Equipment”, “General Machinery”, “Garment, Footwear & Related Products” and “Smelting of Ferrous Metals” are 4 industries whose PMIs exceeded 60%, and among them, the first three mentioned have stayed above 60% for 3 consecutive months. Based on the registration status of enterprises, the indices for “Limited Liability Corporations”, “Shareholding Corporations Ltd” and “Foreign-invested Enterprises” were relatively high, at between 55% and 58%; “State-owned Enterprises” saw a lower index of 51.6%. By region, the indices for the Central and Western regions were higher, at 57.7% and 55.6% respectively, while that of the Eastern Region was lower, at 54.9%. Based on the three major economic zones, the Bohai Sea and Pearl River Delta regions were close, their respective indices being 56.4% and 56.1%, while the index for the Yangtze River Delta was slight lower, at 54%. By end-use category, the higher indices were those of “Intermediate goods”, “Producer goods” and “Consumer goods”, which were between 55.8% and 56.1%, whereas “Raw materials & energy” recorded a slightly lower index of 54.7%.

     

    Output Index

    Output Index for May 2007 was 60.9%, losing 4.6 percentage points from the previous month. Among the 20 industries, only the indices of “Tobacco” and “Oil Refining & Coking” were lower than 50%, while those of the remaining 18 industries were greater than 50%. 12 industries recorded indices which are greater than 60%, and within which, 4 industries, namely “General Machinery”, “Garment, Footwear & Related Products”, “Electrical Machinery & Equipment” and “Papermaking, Printing, Stationaries & Sporting goods” returned with indices greater than 70%. The indices of “Smelting of Ferrous Metals”, “General Machinery” and “Electrical Machinery & Equipment” have stayed above the 60% level for more than 5 months. By region, the indices of the Central and Western regions exceeded 60%, being 64.3% and 61.3% respectively; the index for the Eastern Region was lower, at 59.5%. Based on the three major economic zones, the indices for the Bohai Sea region and the Yangtze River Delta were higher, at above 60%, while that of the Pearl River Delta was lower, at 57%. By end-use category, the indices “Producer goods”, “Consumer goods” and “Intermediate goods” were higher, returning above 60%; “Raw materials & energy” was slightly lower, at 57.4%.     


    New Orders Index

    The New Orders Index for May 2007 was 60.4%, a drop of 4.7 percentage points from the previous month. Among the 20 industries, only the indices of “Tobacco” and “Oil Refining & Coking” were lower than 50%. And within the remaining 18 industries with indices greater than 50%, 11 industries, including “Electrical Machinery & Equipment”, “Smelting of Ferrous Metals” and “Wood Processing & Furniture” saw their indices greater than 60%; in particular the index for “Electrical Machinery & Equipment” surpassed the 70% level. “Food”, “Garment, Footwear & Related Products”, “Transport Equipment” and “Electrical Machinery & Equipment” have managed to keep their indices above the 60% level for more than 6 consecutive months. By region, the Central Region recorded the highest index of 64.8%, followed by the Western Region’s 60.8%; index for the Eastern Region was slightly lower, at 58.8%. Based on the three major economic zones, the indices for the Bohai Sea region and the Pearl River Delta were greater than 60%, while the Yangtze River Delta saw a lower index of 56.1%. By end-use category, “Intermediate goods”, “Consumer goods” and “Raw materials & energy” saw higher indices of between 60.4% and 61.4%; the index for “Producer goods” was lower, at 57.4%.  


    New Export Orders Index

     

    The New Export Orders Index for May 2007 was 57.7%, losing more than 4.6 percentage points compared with last month. Among the 20 industries, only 2, i.e. “Metal Products” and “Wood Processing & Furniture” returned with indices lower than 50%. Among the remaining 18 industries whose indices were greater than 50%, “Garment, Footwear & Related Products”, “Papermaking, Printing, Stationaries & Sporting goods”, “Smelting of Non-ferrous Metals”, “General Machinery”, “Electrical Machinery & Equipment” and “Smelting of Ferrous Metals” were 6 industries recording indices of greater than 60%; of these, the indices of “General Machinery” and “Electrical Machinery & Equipment” have stayed at a high of greater than 60% for more than 4 months. By region, the index for the Central Region was the highest, at 60%, while those of the Eastern and Western regions were close, at 56.9% and 57.9% respectively. Based on the three major economic zones, the indices for the Pearl River Delta and the Bohai Sea region were higher, at 58.4% and 58.2% respectively, while that of the Yangtze River Delta was lower, at 54.9%. By end-use category, the indices of “Raw materials & energy”, “Consumer goods” and “Intermediate goods” were higher, all being greater than 58%; “Producer goods” saw a lower index of 54.1%.


    Backlog of Orders Index

    The Backlog of Orders Index for May 2007 was 51.5%, losing 1.8 percentage points from the previous month. Among the 20 industries, 12 industries, including “Metal Products”, “Electrical Machinery & Equipment”, “Beverage”, “General Machinery”, “Garment, Footwear & Related Products”, saw their indices above the 50% level. The index for “Tobacco” was at the 50% critical level, while 7 industries, namely “Wood Processing & Furniture”, “Oil Refining & Coking”, “Smelting of Non-ferrous Metals”, “Chemicals”, “Specialised Machinery”, “Textile” and “Food” recorded indices that are lower than 50%. By region, the indices for the Central and Eastern regions were greater than 50%, being 52.5% and 51.9% respectively, while that of the Western Region was lower than 50%. Based on the three major economic zones, the indices of the Pearl River Delta and the Bohai Sea region were greater than 50%, hovering at the 54% level, while the index for the Yangtze River Delta was lower than 50%. By end-use category, the indices for “Intermediate goods”, “Consumer goods” and “Producer goods” surpassed the 50% level, at between 50.6% and 54.7%, while the index for “Raw materials & energy” was at the 50% critical level.


     

    Stocks of Finished Goods Index

    The Stocks of Finished Goods Index for May 2007 was 44.5%, a decrease of 2.3 percentage points from the previous month. The index has stayed under 50% since January 2005. By industry, “Beverage”, “Metal Products”, “Garment, Footwear & Related Products” and “Papermaking, Printing, Stationaries & Sporting goods” were 4 of the 20 industries which recorded above 50% indices. Of the remaining 16 industries whose indices were lower than 50%, the 5 industries with the lowest indices were “Wood Processing & Furniture”, “Smelting of Non-ferrous Metals”, “Smelting of Ferrous Metals”, “Tobacco” and “Non-metal Minerals”, with indices returning at below 40% level. By region, the Western Region had the lowest index of 41.1%, while the indices of the Eastern and Central regions were close, at 44.6% and 46% respectively. Based on the three major economic zones, the indices for the Yangtze River Delta and the Pearl River Delta were close, the respective figures being 42.3% and 43.2%; the index for the Bohai Sea region was 47.5%. By end-use category, the lowest index was that of “Raw materials & energy”, at less than 40%; next was “Intermediate goods”, at 43%; the indices for “Consumer goods” and “Producer goods” were close, being 46.8% and 47.1% respectively.  



     

    Purchases of Inputs Index

    The Purchases of Inputs Index for May 2007 was 58.5%, plunging 4.9 percentage points from the previous month. Among the 20 industries, only the index for “Metal Products” was lower than 50%. Within the remaining 19 industries whose indices were greater than 50%, “Electrical Machinery and Equipment”, “General Machinery”, “Garment, Footwear & Related Products”, “Smelting of Ferrous Metals”, “Food”, “Chemical Fibre, Rubber and Plastics”, “Papermaking, Printing, Stationaries & Sporting goods” and “Transport Equipment” were the 8 industries whose indices were greater than 60%. “Food”, “General Machinery”, “Transport Equipment” and “Electrical Machinery & Equipment” have maintained their indices at above the 60% level for 3 consecutive months. By region, the indices for the Central and Western regions were greater than 60%, at 62.5% and 60.2% respectively; the index for the Eastern regions was lower, at 56.7%. Based on the three major economic zones, the Yangtze River Delta and the Bohai Sea region saw higher indices, the respective figures being 57.1% and 56.9%; the index for the Pearl River Delta was lower, at 54%. By end-use category, there was little difference among the four categories, with indices between 57.9% and 59.9%.

    Imports Index

    Imports Index for May 2007 was 51.5%, losing 4.8 percentage points from the previous month. 14 of the 20 industries, including “General Machinery”, “Wood Processing & Furniture” and “Electrical Machinery & Equipment” saw their indices greater than 50%; indices of the remaining 6 industries, namely “Smelting of Non-ferrous Metals”, “Metal Products”, “Tobacco”, “Pharmaceuticals”, “Specialised Machinery” and “Transport Equipment” were lower than 50%. By region, the indices for the Central and Western regions were higher, at above 54%, while that of the Eastern Region was lower, at 50.2%. Based on the three economic zones, the index for the Pearl River Delta was the highest, at 54.3%, while those of the Yangtze River Delta and the Bohai Sea region were lower, at below 50%. By end-use category, the indices for “Raw materials & energy” and “Intermediate goods” were higher, the respective figures being 53.5% and 52.1%, while the indices for “Consumer goods” and “Producer goods” were close, both of which were a little bit greater than 50%.    


    Input Prices Index

    The Input Prices Index for May 2007 was 65.9%, rising 1.0 percentage points from the previous month. The index has been rising since the beginning of the year, and has reached a two-year high. Among the 20 industries, except for “Communication, IT & Electronics Equipment” whose index was at the 50% critical level, the indices of the remaining 19 industries were greater than 50%, within which, 6 industries, namely “Smelting of Ferrous Metals”, “Electrical Machinery & Equipment”, “General Machinery”, “Food”, “Oil Refining & Coking” and “Smelting of Non-Ferrous Metals” saw their indices surpassing the 70% level, the highest being “Smelting of Ferrous Metals”, with an index of 87.5%. The indices of “Smelting of Ferrous Metals” and “Metal Products” have stayed above 60% for 8 consecutive months. By region, the indices for the Eastern, Central and Western regions have surpassed 60%, at between 64.8% and 68.6%. Based on the three major economic zones, the Bohai Sea region recorded the highest index of 67%, while the indices of the Pearl River Delta and Yangtze River Delta were close, at 63.6% and 63.4% respectively. By end-use category, the highest index was that for “Raw materials & energy”, at 76.9%, followed by “Intermediate goods” and “Producer goods”, at 65.1%; the lowest was “Consumer goods”, at 61.8%.



     

    Stocks of Major Inputs Index

    The Stocks of Major Inputs Index for May 2007 was 49.1%, losing 1.2 percentage points from the previous month. By industry, 4 of the 20 industries, namely “Electrical Machinery & equipment”, “Smelting of Ferrous Metals”, “Textile” and “Chemicals”, recorded indices that are higher than 50%; “Beverage”, “Tobacco”, “Oil Refining & Coking”, “General Machinery” and “Communication, IT & Electronics Equipment” were 5 industries whose indices were at the 50% critical level; the indices of the remaining 11 industries, which included “Papermaking, Printing, Stationaries & Sporting goods”, “Pharmaceutical” and “Non-metal Minerals” were lower than 50%. By region, the indices between the Eastern, Central and Western regions were close, at between 48.7% and 49.9%. Based on the three major economic zones, the index for the Pearl River Delta was greater than 50%, at 54.5%, while those of the Yangtze River Delta and the Bohai Sea region were lower than 50%. By end-use category, the indices for “Intermediate goods” and “Producer goods” were slightly higher than 50%, whereas those of the remaining two categories were under 50%.


     

    Employment Index

    The Employment Index for May 2007 was 51.3%, losing 1.1 percentage points from the previous month. Among the 20 industries, 10 saw their indices above 50%, with “Electrical Machinery & Equipment” greater than 60%; “Textile”, “Papermaking, Printing, Stationaries & Sporting goods”, “Smelting of Ferrous Metals” and “Smelting of Non-ferrous Metals” were 4 industries whose indices were at the 50% critical level; industries with indices lower than 50% were “Wood Processing & Furniture”, “Tobacco”, “Communication, IT & Electronics Equipment”, “Oil Refining & Coking”, “Chemical Fibre, Rubber & Plastics” ,“Food” and “Papermaking”. By region, the indices for the Eastern and Central regions were greater than 50%, being 51.8% and 50.9% respectively, whereas the Western region was slightly below 50%. Based on the three major economic zones, the indices for the Yangtze River Delta and the Pearl River Delta were higher, the respective figures being 52.7% and 52.3%; the Bohai Sea region returned with a lower index of 50.6%. By end-use category, the index for “Producer goods” was slightly higher, at 52.4%, while the remaining three categories exhibited little difference between the indices, which were slightly greater than 51%.

     

     

    Suppliers’ Delivery Time Index

    The Suppliers’ Delivery Time Index for May 2007 was 51.8%, edging down 0.1 percentage points from the previous month. By industry, 9 of the 20 industries, which included “Non-metal Minerals”, “Transport Equipment” and “Textile”, recorded indices which were greater than 50%; “Food”, “Beverage”, “Oil Refining & Coking”, “Smelting of Ferrous Metals”, “Smelting of Non-ferrous Metals” and “Communication, IT & Electronics Equipment” were 6 industries with indices at the 50% critical level; 5 industries, namely “General Machinery", “Special Machinery”, “Pharmaceutical”, “Papermaking, Printing, Stationaries & Sporting goods” and “Chemicals” saw their indices lower than 50%. By region, the index for the Central Region was higher, at 52.9%, whereas the indices for the Eastern and Western regions were close, at slightly higher than 51%. Based on the three major economic zones, the index for the Yangtze River Delta was higher, at 52.4%, while that of the Bohai Sea region was slightly above 50%; the Pearl River Delta saw its index at the 50% critical level. By end-use category, “Intermediate goods” saw a higher index, at 52.6%, whereas those of the remaining three product categories were close, at between 51% and 52%. 


    Products in short supply:
    Coal, copper, coke, steel scrap, pig iron etc.
     
    Products with rising prices:

    Coal, crude oil, heavy oil, certain steel products, stainless steel, fine iron ore, iron alloy,  copper, copper products, aluminium products, maize, bean pulp etc.

     

    Products with declining prices:
    Electric power, methanol, sugar, cotton etc.