• China Manufacturing PMI for July was 53.3%, returning 1.2 percentage points lower from last month.
• Output, New Orders, Inputs Prices Indices stayed above 55%.
• Input Prices Index fell below 60% for the first time in 4 months.
According to the China Federation of Logistics and Purchasing (CFLP), the China Manufacturing PMI in March 2007 was 53.3%, returning 1.2 percentage points lower from the previous month, the lowest level in recent 5 months. The PMI has stayed above 50% since January 2005.
Among all the China Manufacturing PMI indices for the month, only the indices for Backlog of Orders and Stocks of Finished Goods were lower than 50%, the rest of the indices were higher than 50%; Output, New Orders Indices and Input Prices indices were the highest, at above 55%. Compared with the previous month, except for of Stocks of Finished Goods and Stock of Major Inputs which saw their indices rising, the remaining indices fell, with Output and Input Prices Indices exhibiting the most striking drop of approximately 4 percentage points.
According to Zhang Liqun, our contributing analyst, “the continued downward trend of the July PMI is a stark contrast with the economic trend in the first half of the year. The two main reasons are: First, PMI is somewhat predictive. As was pointed out last month, the macroeconomic control measures instituted earlier this year will be pre-empted by corporate purchasing managers and reflected in the PMI’s pattern; secondly, market supply and demand has changed, in that fewer products are in short-supply and competition is increasingly intensive. From the perspective of economic cyclical fluctuations, the changes in supply-demand indicate changes in economic growth trend, which although not reflected in the first six month due to robust export growth, stringent measures to control the export of certain products should result in a gradual export reduction. Market changes are generally felt by companies much earlier and therefore reflected in the PMI pattern. Overall, the PMI trend predicts a small decrease in economic growth, which might be possible, based on the outcome of macroeconomic measures and market changes. A closer observation is necessary.”
Among the 20 industries, except for “Transport Equipment” and “Specialised Machinery”, the indices for the remaining 18 industries were greater than 50%, at between 50.8% and 58%. Based on the registration status of enterprises, “Limited Liability Corporations”, “Shareholding Corporations Ltd” and “Foreign-invested Enterprises” returned with higher indices of between 52.2% and 55.1%, whereas the index for “State-owned Enterprises” was lower than 50%. By region, the indices for the Central and Western regions were higher, at 54.1% and 55.2% respectively; the Eastern Region was slightly lower, at 52.6%. Based on the three major economic zones, indices for the Pearl River Delta and
Output Index
Output Index for July 2007 was 55.7%, a drop of 4.0 percentage points from last month, the lowest level in 12 months. Among the 20 industries, 15 recorded indices which were greater than 50%, within which “Smelting of Non-ferrous Metals”, General Machinery”, “Food”, “Beverage”, “Communication, IT & Electronics Equipment”, “Papermaking, Printing, Stationeries & Sporting goods” and “Textile” saw indices greater than 60%. “General Machinery” is one industry whose index has stayed above 60% for more than 7 months. “Pharmaceutical”, “Non-metal Minerals”, “Specialised Machinery”, “Chemicals” and “Transport Equipment” were 5 industries whose indices were lower than 50%. By region, the Western Region recorded the highest index of 58.7%; the Eastern and Central regions were close, at 54.7% and 56.7% respectively. Based on the three major economic zones, the
New Orders Index
The New Orders Index for July 2007 was 56.0%, losing 1.4 percentage points from the previous month, the lowest in 12 months. Among the 20 industries, only “Specialised Machinery” and “Transport Equipment” saw their indices lower than 50%, while the remaining 18 industries returned with indices greater than 50%, within which, “Beverage”, “Garment, Footwear & Related Products”, “Smelting of Non-ferrous Metals”, “Food” and “Communication, IT & Electronics Equipment” were 5 industries whose indices were greater than 60%. The indices of “Food” and “Garment, Footwear & Related Products” had stayed high above 60% for more than 8 months. By region, the indices of the Central and Western regions were higher, at 57.3% and 58.8% respectively; the Eastern region returned slightly lower, at 54.9%. Based on the three major economic zones, the Pearl River Delta saw a higher index of 56.9%, while those of the Yangtze River Delta and the
New Export Orders Index
The New Export Orders Index for July 2007 was 53.5%, losing 1.5 percentage points from the previous month, the lowest in 5 months. Among the 20 industries, 13 saw their indices higher than 50%, within which, 4 industries, namely “General Machinery”, “Chemical Fibre, Rubber & Plastics”, “Wood Processing & Furniture” and “Tobacco” recorded indices of greater than 60%. “General Equipment” had stayed high above the 60% level for 6 consecutive months. The indices of 7 industries were lower than 50%; the lowest being “Oil Refining & Coking” and “Papermaking, Printing, Stationeries & Sporting goods”, whose indices were lower than 45%. By region, the Central and Western regions recorded higher indices, their respective figures being 55.3% and 55.1%, whereas the Eastern Region was slightly lower, at 52.7%. The indices for the three major economic zones were close, ranging between 51.7% and 52.5%. By end-use category, “Producer goods” performed best, with an index of 60%, followed by “Intermediate goods” and “Consumer goods”, the indices of which were 53.5%; “Raw materials & energy” returned with the lowest index among all, at below 50%.
Backlog of Orders Index
The Backlog of Orders Index for July 2007 was 48.8%, a decrease of 1.5 percentage points from the previous month, and falling below 50% for the first time in 5 months. Among the 20 industries, 8 industries, including “General Machinery”, “Pharmaceutical” and “Garment, Footwear & Related Products” returned with indices higher than 50%; the indices of “Wood Processing & Furniture” and “Chemical Fibre, Rubber & Plastics” were at the 50% critical level, while 10 industries saw their indices under 50%, the lowest being “Specialised Machinery” and “Transport Equipment”, whose indices were under 45%. By region, the indices for the Eastern, Central and Western regions had slid below 50%. Based on the three major economic zones, the
Stocks of Finished Goods Index
The Stocks of Finished Goods Index for July 2007 was 47.5%, edging up by 0.2 percentage points from the previous month. This index has been staying under the 50% level since January 2005. Among the 20 industries, 4 recorded indices greater than 50%, which were “General Machinery”, “Oil Refining & Coking”, “Textile” and “Pharmaceutical”. “Metal Products”, “Transport Equipment”, “Electrical Machinery & Equipment” and “Communication, IT & Electronics Equipment” were 4 industries whose indices were at the 50% critical level. The indices of the remaining 12 industries were lower than 50%, the lowest 4 being “Wood Processing & Furniture”, “Food”, “Smelting of Non-ferrous Metals” and “Tobacco”, the indices of which were lower than 40%. By region, the Eastern, Central and Western regions saw their indices under 50%. Based on the three major economic zones, the index for the Yangtze River Delta was lower than 50%, whereas those of the Pearl River Delta and the
Purchases of Inputs Index
The Purchases of Inputs Index for July 2007 was 54.1%, falling 2.6 percentage points from the previous month, the lowest in 12 months. 14 out of the 20 industries saw their indices higher than 50%, the leading industries being “Garment, Footwear & Related Products” and “Smelting of Ferrous Metals”, whose indices were higher than 60%. The indices for “Chemicals”, “Metal Products”, “Tobacco”, “Transport Equipment”, “Specialised Machinery” and “Pharmaceutical” were lower than 50%. By region, the Western Region recorded the highest index of 56.7%, followed by the Eastern Region, at 54.1%, the lowest being the Central Region, at 52.8%. Based on the three major economic zones, the Pearl River Delta and Bohai Sea region returned with higher indices, the respective figures of which were 57.8% and 56.2%, whereas that of the Yangtze River Delta was lower, at 51.7%. By end-use category, “Intermediate goods” and “Raw materials & energy” saw higher indices, at 57.6% and 55% respectively, while “Consumer goods” and “Producer goods” saw lower indices of 52.8% and 50.1% respectively.
Imports Index
Imports Index for July 2007 was 50.4%, having lost 3.2 percentage points from the previous month, the lowest in 11 months. Of the 20 industries, “Oil Refining & Coking”, “General Machinery”, “Specialised Machinery”, “Communication, IT & Electronics Equipment”, “Chemical Fibres, Rubber & Plastics”, “Non-metal Minerals”, “Textile” and “Smelting of Ferrous Metals” were the 8 industries whose indices were higher than 50%, the highest being “Oil Refining & Coking”, at 64.7%; indices of the remaining 12 industries were lower than 50%. By region, the Central Region recorded the highest index of 52.1%, while the Eastern and Western regions were slightly lower than 50%. Based on the three major economic zones, indices for the Pearl River Delta and Bohai Sea region were greater than 50%, at 53.7% and 50.5% respectively, whereas that of the Yangtze River Delta was lower than 50%. By end-use category, indices for “Intermediate goods”, “Raw materials & energy” and “Producer goods” were higher than 50%, ranging between 51% and 54.4%; the index for “Consumer goods” was lower than 50%.
Input Prices Index
The Input Prices Index for July 2007 was 58.9%, losing 3.9 percentage points from the previous month, coming under 60% for the first time in 4 months. By industry, only the index for “Metal Products” was lower than 50%, while the indices of the remaining 19 industries were greater than 50%, whereby 9 of which recorded indices above 60%, and of which, “Oil Refining & Coking” and “Pharmaceutical” were 2 leading industries whose indices were above 70%. “Smelting of Ferrous Metals” has stayed above 60% for 10 consecutive months. By region, the index for the Central Region is the highest, at 60.9%, while there was little difference between those of the Eastern and Western regions, at 58.1% and 58.7% respectively. Based on the three major economic zones, the highest index was that of the
Stocks of Major Inputs Index
The Stocks of Major Inputs Index for July 2007 was 50.4%, rising 1.3 percentage points from the previous month. By industry, 9 of the 20 industries, including “Wood Processing & Furniture”, “Oil Refining & Coking” and “Garment, Footwear & Related Products” saw their indices greater than 50%, while “Food”, “Textile”, “Pharmaceutical” and “Transport Equipment” were 4 industries whose indices were at the 50% critical level. The indices of 7 industries, including “Metal Products”, “Smelting of non-Ferrous Metals” and “Chemical Fibres, Rubber & Plastics” were lower than 50%. By region, the index for the Western Region was higher, at 51.6%, while those of the Eastern and Central regions were close, being slightly higher than 50%. Based on the three major economic zones, the indices for the Pearl River Delta and
Employment Index
The Employment Index for July 2007 was 51.1%, losing 0.2 percentage points from the previous month. 11 of the 20 industries, including “Garment, Footwear & Related Products”, “Wood Processing & Furniture” and “Transport Equipment” saw indices higher than 50%, while the indices of 4 industries,namely “Chemicals”, “Smelting of “Non-ferrous Metals”, “Metals” and “General Machinery”, were at the 50% critical level. The indices of “Food”, “Communication, IT & Electronics Products”, “Oil Refining & Coking”, “Beverage” and “Tobacco” were lower than 50%. By region, the Central Region performed best, with an index of 52.6%; next was the Western Region, at 51.1%, followed by the Eastern Region, the index of which was slightly above 50%. Based on the three major economic zones, the indices of the Pearl River Delta and
Suppliers’ Delivery Time Index
The Suppliers’ Delivery Time Index for July 2007 was 51.2%, a decrease of 0.8 percentage points from the previous month. Within the 20 industries, 9, including “Garment, Footwear & Related Products”, “Non-metal Minerals” and “Wood Processing & Furniture” saw their indices above the 50% level. The indices of 5 industries, namely “Tobacco”, “Papermaking, Printing, Stationeries & Sporting goods”, “Pharmaceutical”, “Smelting of non-Ferrous Metals” and “Specialised Machinery” were at the 50% critical level; 6 industries, including “Metal Products”, “Beverage” and “General Machinery” returned with indices lower than 50%. By region, the indices for the Eastern and Central regions were slightly higher, at 51.1% and 52%, while that of the Western Region was at the 50% critical level. The indices of the three major economic zones were higher than 50%, at between 50.6% and 51.7%. By end-use category, the index for “Raw materials & energy” was higher, at 52.3%, whereas those of the remaining three categories were close, ranging between 50.5% and 51.5%. 
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