• China Manufacturing PMI for June was 54.5%, a drop of 1.2 percentage points from last month.
• Output and New Orders Indices fell for the first time in 4 months to under 60%.
• Input Prices Index came down for the first time this year, although still staying above 60%.
According to the China Federation of Logistics and Purchasing (CFLP), the China Manufacturing PMI in June 2007 was 54.5%, losing 1.2 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 the indices for Stocks of Finished Goods and Stocks of Major Inputs were lower than 50%, the remaining indices were higher than 50%, the highest being the Input Prices Index, at greater than 60%. Looking at the trend and comparing with the previous month, the Stocks of Finished Goods, the Import Index and the Supplier’s Delivery Time Index were higher. Stocks of Major Inputs and Employment indices stayed at their previous months’ levels, whereas the rest of the indices returned lower. Except for New Orders and Input Prices indices, whose drop exceeded 3 percentage points, there was no major rises or falls for the rest of the indices, in that all kept within the 3 percentage point band. Although Input Prices Index has fallen for the first time this year, it remained at above 60% level, exhibiting a continued trend of rising prices.
According to Zhang Liqun, our contributing analyst, “since this year, our rate of economic growth has been rising from an existing high, and because of which, the government has taken a series of measures directed at alleviating the problem, including stringent measures to control fixed asset investments, export controls aiming particularly at energy-intensive, highly-polluting and resource-based (Lianggao Yizi) products, and a stable monetary policy, tightening whenever necessary. These measures are seeing results and changes to the June PMI may be a reflection of their effects. As the PMI is prognosticative, it may be foretelling that economy growth is shifting from a rising trend to a stabilising trend. Of course, the predictive capabilities of the PMI on the economic situation remain to be seen, thus judgements cannot be affirmative.
Among the 20 industries, except for “Transport Equipment”, which was slightly under 50%, the indices for the rest of the 19 industries were higher than 50%, within which “Electrical Machinery & Equipment” was higher than 60%, having kept at the above-60% level for four 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 54% and 55.6%; “State-owned Enterprises” saw a lower index of 51.4%. By region, the indices did not differ much, all keeping within the range of 54.1% and 55.1%. The situation for the three major economic zones appeared similar. By End-use category, “Producer goods” had a higher index of 56.7%; “Intermediate goods” and “Consumer goods” were close, at above 54%; “Raw materials & energy” was lower, at 51.9%/
Output Index
Output Index for June 2007 was 59.7%, dipping 1.2 percentage points from the previous month. This was the first time in 4 months that the index fell below 60%. All 20 industries returned with greater-than-50% indices, within which, 12 industries including “Electrical Machinery & Equipment”, “General Machinery & Equipment” and “Tobacco” saw their indices higher than 60%, the highest being “Electrical Machinery & Equipment”, at 75.1%. The indices for “Smelting of Ferrous Metals”, “General Machinery” and “Electrical Machinery & Equipment” have maintained at above 60% level for 6 consecutive months. “Chemicals” returned with the lowest index of 50.6%. By region, there was little difference between the Eastern, Central and Western regions, all ranging between 59.5% and 60.5%. Based on the three major economic zones, the index for the Pearl River Delta was the highest, at 62.5%; indices of the Yangtze River Delta and the Bohai Sea Region differed little, at 58.8% and 59.4% respectively. By End-use category, the highest indices were those of “Producer goods” and “Intermediate goods”, at above 60%, the respective indices being 65.6% and 60.6%; next was “Consumer goods”, at 59.1%; the index for “Raw materials & energy” was lower, at 55.3%.
New Orders Index
The New Orders Index for June 2007 was 57.4%, returning 3.0 percentage points lower than the previous month. The index has fallen below 60% for the first time in 4 months. The indices for all 20 industries were higher than 50%, within which 6 industries, namely “Electrical Machinery & Equipment”, “Papermaking, Printing, Stationeries & Sporting goods”, “General Machinery”, “Tobacco”, “Chemical Fibre, Rubber & Plastics” and “Smelting of Non-ferrous Metals” saw their indices surpassing 60%; among them, the index for “Electrical Machinery & Equipment” was the highest, at 71%, having stayed above the 60% level for 7 consecutive months. “Transport Equipment” fell below 60% for the first time in 7 months, while the indices for “Food” and “Chemicals” were slightly above 50%. By region, there was little difference between the indices of the Eastern, Central and Western regions, all being between 56.9% and 58.5%. Based on the three major economic zones, the index for the Yangtze River Delta region was the highest, at 58.9%, whereas those of the Bohai Sea Region and the Pearl River Delta were close, at 56.9% and 55.9% respectively. By End-use category, the indices for “Intermediate goods”, “Consumer goods” and “Producer goods” were higher, at between 57.8% and 59.8%; “Raw materials & energy” were lower, at 51.9%. 
New Export Orders Index
The New Export Orders Index for May 2007 was 55.0%, a drop of 2.7% from the previous month. Among the 20 industries, the indices for “Smelting of Non-Ferrous Metals” and “Oil Refining & Coking” were lower than 50%; indices for 3 industries, namely “Papermaking, Printing, Stationeries & Sporting goods”, “Pharmaceuticals” and “Smelting of Ferrous Metals” were at the 50% critical level. The indices of 15 industries were higher than 50%, within which the 4 leading industries whose indices exceeded 60% were “General Machinery”, “Wood Processing & Furniture”, “Chemical Fibre, Rubber & Plastics” and “Electrical Machinery & Equipment”. “General Machinery” and “Electrical Machinery & Equipment” have seen their indices above 60% for 5 consecutive months. By region, the indices for the Eastern and Western regions did not differ much, both at above 55%; the Central Region came in with a lower index, at 54.3%. Based on the three major economic zones, the indices of the Pearl River Delta and Bohai Sea Region were greater than 55%, the respective figures being 58.1% and 55.5%; the index for the Yangtze River Delta was slightly lower, at 54.1%. By End-use category, “Producer goods” returned with the highest index, at 62.2%; next were “Consumer goods” and “Intermediate goods’, at 57% and 52.7% respectively; the index for “Raw materials & energy” was the lowest, at below 50%.
Backlog of Orders Index
The Backlog of Orders Index for June 2007 was close to the 50% critical level, at 50.3%, after losing 1.2 percentage points from the previous month. Among the 20 industries, 10 industries, including “specialised Machinery”, “General Machinery” and “Oil Refining & Coking” saw their indices greater than 50%; in particular “Special Machinery” saw its index at 62.8%. The indices for “Textile” and “Garment, Footwear & Related Products” were at the 50% critical level, whereas 8 industries, including “Communications, IT & Electronics Equipment”, “Smelting of Ferrous Metals” and “Smelting of Non-ferrous Metals” etc. registered indices lower than 50%%. By region, the indices for the Eastern and Central regions were slightly higher than 50%, whereas that of the Western Region was lower than 50%. Based on the three major economic zones, the index for the Bohai Sea Region was the highest, at 55.7%, while those of the Yangtze River Delta and the Pearl River Delta was lower than 50%. By End-use category, the indices for “Consumer goods” and “Producer goods’ were greater than 50%, at 51.2% and 52.5% respectively; “Intermediate goods” saw its index at the 50% critical level, while the index for “Raw materials & energy” was lower than 50%.
Stocks of Finished Goods Index
The Stocks of Finished Goods Index for June 2007 was 47.3%, rising 2.8 percentage points from the previous month. The index has stayed under 50% since January 2005. Among the 20 industries, “Metal Products”, “Electrical Machinery & Equipment”, “Specialised Equipment”, Oil Refining & Coking”, “General Machinery” and “Textile” were 6 industries whose indices were higher than 50%; in particular, “Metal Products” recorded the highest index of 60.5%. “Chemicals” and “Chemical Fibre, Rubber & Plastics” were the 2 industries whose indices were at the 50% critical level. 12 industries, including “Garment, Footwear & Related Products”, “Smelting of Ferrous Metals” and “Communication, IT & Electronics Equipments” saw their indices lower than 50%, and especially “Tobacco”, “Food” and “Wood Processing & Furniture” saw their indices lower than 40%. By region, the indices for the Eastern, Central and Western regions were lower than 50%, all being between 46.3% and 47.7%. The indices for the three major economic zones were similar. By End-use category, the higher indices were those of “Raw materials & energy” and “Producer goods”, at greater than 51%, while those of “Intermediate goods” and “Consumer goods” were lower than 50%.
Purchases of Inputs Index
The Purchases of Inputs Index for June 2007 was 56.7%, losing 1.8 percentage points from the previous month. Among the 20 industries, 15 industries saw their indices higher than 50%, within which the indices of 5 industries, namely “Electrical Machinery & Equipment”, “Papermaking, Printing, Stationeries & Sporting goods”, “Garment, Footwear & Related Products”, “General Machinery” and “Non-metal Minerals” were greater than 60%; with “Electrical Machinery & Equipment” being the highest, at 71.8%. The indices of “Electrical Machinery & Equipment” and “General Machinery” have stayed above 60% for more than 4 consecutive months. “Beverage”, “Textile”, “Metal Products”, “Transport Equipment” and “Food” returned with lower-than-50% indices. The indices for “Transport Equipment” and “Food” have made the biggest fall in the past 4 months, plunging from a level higher than 60% during the previous three months to under 50% in the current month. By region, the index for the Eastern Region was the highest, at 57.2%; indices for the Central and Western regions were closer, at 55.8% and 55.9% respectively. Based on the three major economic zones, the
Imports Index
Imports Index for June 2007 was 53.6%, having gained 2.1 percentage points from the previous month. 13 out of the 20 industries recorded indices higher than 50%, the leaders being “Garment, Footwear & Related Products” and “General Machinery”, whose indices were greater than 60%, being 68.6% and 64.4% respectively. The indices for “Beverage” and “Tobacco” were at the 50% critical level, whereas those of 5 industries, namely “Transport Equipment”, “Pharmaceutical”, “Food”, “Smelting of Non-ferrous Metals and “Metal Products” were lower than 50%. By region, there was little difference between the indices, all within the range of 53.2% and 55.4%. Based on the three major economic zones, indices for the Pearl River Delta and Bohai Sea region were close, being slightly higher than 56%, whereas that of the Yangtze River Delta was slightly lower than 50%. By End-use category, only “Raw materials & energy” saw its index slightly lower than 50%; indices of the remaining three categories were greater than 50%, with “Producer goods” being the highest, at 58.4%.
Input Prices Index
The Input Prices Index for June 2007 was 62.8%, 3.1 percentage points lower than the previous month. This is the first dip in 5 months, but the index remained above 60%, a sign of the rising price trend. Within the 20 industries, only “Wood Processing & Furniture” and “Communication, IT & Electronics Equipment” returned with indices slightly lower than 50%; the indices for the remaining 18 industries were greater than 50%, within which, 12 were higher than 60%, the 4 leading industries being “Pharmaceutical”, “Textile”, “Food” and “Oil Refining & Coking”, with indices above 70%. The index for “Smelting of Ferrous Metals” has stayed at above 60% for 9 consecutive months. By region, all the indices for the Eastern, Central and Western regions were above 60%, at between 61.2% and 67%. Based on the three major economic zones, the Yangtze River Delta and the
Stocks of Major Inputs Index
The Stocks of Major Inputs Index for June 2007 was 49.1%, no change from the previous month. Within the 20 industries, “Papermaking, Printing, Stationeries & Sporting goods”, “Tobacco”, “Oil Refining & Coking”, “Electrical Machinery & Equipment” and “Smelting of Ferrous Metals” were the 5 industries whose indices were higher than 50%. The 8 industries whose indices were at the 50% critical level were “Beverage”, “Textile”, “Garment, Footwear & Related Products”, “Wood Processing & Furniture”, “Chemicals”, “Smelting of Ferrous Metals”, “Metal Products” and “Transport Equipment”; indices of the remaining 7 industries were lower than 50%. By region, the index for the Central Region was higher than 50%, at 51.7%; index for the Western Region was at the 50% critical level; the Eastern Region saw its index under 50%. Based on the three major economic zones, there was little difference between the indices, all ranging from 47.7% and 48.2%. By end-use category, the index for “Consumer goods” was slightly higher than 50%, whereas “Raw materials & energy” saw its index at the 50% critical level; indices of the remaining two categories were lower than 50%.
Employment Index
The Employment Index for June 2007 was 51.3%, no change from the previous month. Within the 20 industries, 12 industries, led by “Garment, Footwear & Related Products”, “Pharmaceutical” and “Metal Products” saw their indices higher than 50%; the indices for “Beverage”, “Textile’, “Chemical Fibre, Rubber & Plastics”, “Non-metal Minerals” and “Communication, IT & Electronics Equipment” were at the 50% critical level, whereas those of “Transport Equipment”, “Food” and “Tobacco” were 3 industries whose indices were lower than 50%. By region, the index for the Eastern Region was greater than 50%, at 52.3%; index for the Central Region was at the 50% critical level; the Eastern Region saw its index slightly lower than 50%. The indices for the three major economic zones were higher than 50%, at between 50.8% and 53%. By End-use category, the indices for all four product categories were greater than 50%, however, with little difference, ranging from 50.5% to 52.6%.
Suppliers’ Delivery Time Index
The Suppliers’ Delivery Time Index for June 2007 was 52.0%, edging up 0.2 percentage points from the previous month. By industry, 11 of the 20 industries, led by “Metal Products”, “Non-metal Minerals” and “Transport Equipment” saw their indices greater than 50%, within which, the index for “Metal Products” reached 60.5%. The indices for 6 industries, namely, “Beverage”, “Wood Processing & Furniture”, “Oil Refining & Coking”, “Chemicals”, “Pharmaceuticals” and “Communications, IT & Electronics Equipments” were at the 50% critical level, whereas “Smelting of Non-ferrous Metals”, “Specialised Machinery” and “General Machinery” were 3 industries whose indices were lower than 50%. By region, the index for the Central Region was higher, at 52.5%; those of the Eastern and Western regions were close, at 51.4% and 50.6% respectively. Based on the three major economic zones, the Yangtze River Delta returned with a higher index, at 52.4%; the index for the
Coal, crude oil, certain steel products, stainless steel, copper, aluminium, calcium carbide, sulphur, timber, corn, starch, cotton, tobacco.
