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December Manufacturing Purchasing Managers Index and Non-manufacturing Business Activity Index Stable and Slow Down

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——Zhao Qinghe, a senior statistician from the Service Industry Survey Center of the National Bureau of Statistics, interprets the China Purchasing Managers Index in December 2020

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   On December 31, 2020, the Service Industry Survey Center of the National Bureau of Statistics and the China Federation of Logistics and Purchasing released the China Purchasing Manager Index. In this regard, Zhao Qinghe, a senior statistician at the Service Industry Survey Center of the National Bureau of Statistics, explained.

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In December, my country’s economic recovery continued to consolidate. China’s manufacturing purchasing managers’ index, non-manufacturing business activity index, and comprehensive PMI output index were 51.9%, 55.7%, and 55.1%, respectively, which were lower than 0.2 and 0.7 of the previous month. And 0.6 percentage points, but both continued to be at a relatively high operating level during the year, and remained above the line of prosperity for 10 consecutive months.

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   1. Manufacturing Purchasing Managers’ Index has steadily declined slightly

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Entering the fourth quarter, the pace of recovery in the manufacturing industry has accelerated. In December, the manufacturing PMI was 51.9%. Although it fell slightly, it was only 0.2 percentage points lower than the previous month’s high for the year. The overall manufacturing industry maintained a steady recovery. The prosperity is at a relatively high level during the year. Main features of this month:

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   First, both ends of production and demand continued to improve. The production index and the new order index were 54.2% and 53.6%, respectively. Although they fell 0.5 and 0.3 percentage points from the previous month, they were both the second highest points during the year, and the difference between the two continued to shrink. The manufacturing industry maintained a good growth trend. The relationship needs to be more balanced. Among the 21 industries surveyed, the production index and new order index of 18 and 17 industries are in the expansion range, including ferrous metal smelting and rolling processing, general equipment, special equipment, computer communication electronic equipment, instrumentation and other industries Both indexes are higher than 56.0%, and have increased to varying degrees from the previous month. The industry’s growth momentum has increased and production activities have accelerated.

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   The second is that the import and export index kept expanding for four consecutive months. The new export order index and the import index were 51.3% and 50.4%, respectively, which were 0.2 and 0.5 percentage points lower than last month, and continued to be in the boom range. The survey results also show that the expected index of production and operation activities of export enterprises has rebounded for eight consecutive months, reaching the highest point of the year. Manufacturing export enterprises have continued to increase their confidence in market development.

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   Third, the leading role of high-tech manufacturing continues to appear. Since the beginning of this year, the PMI of the high-tech manufacturing industry has always been higher than that of the overall manufacturing industry. This month it was 55.8%. Although it was 0.4 percentage points lower than the previous month, it was still the second highest point this year. Among them, the production index, new order index, and employee index were 59.3%, 58.2%, and 52.6%, respectively, which were 5.1, 4.6, and 3.0 percentage points higher than the overall manufacturing industry, indicating that the production and demand of high-tech manufacturing industries are booming, and the demand for labor continues to grow. , Which has significantly contributed to the overall recovery of the manufacturing industry.

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  Fourth is that the price index rose to an annual high. Recently, the prices of some bulk commodities have continued to rise, and market demand has continued to pick up, which has promoted the acceleration of the purchase price of raw materials and product sales in the manufacturing industry. 5.4 and 2.4 percentage points in the month, both highs for the year. In terms of industry conditions, the two price indices of upstream industries such as petroleum processing, coal and other fuel processing, ferrous metal smelting and rolling processing, and non-ferrous metal smelting and rolling processing are higher than 70.0%, a significant increase from the previous month. The rapid increase in raw material prices has increased the cost pressures of enterprises. This month, 49.4% of enterprises reported high raw material costs, the highest in the past two years.

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  Fifth, the PMI of large and medium-sized enterprises continues to remain above the critical point. The PMI of large and medium-sized enterprises were both 52.7%, which continued to operate in the boom range of 52.0% and above; the PMI of small enterprises was 48.8%, which was 1.3 percentage points lower than last month, and fell below the prosperity and decline line. This month, the proportion of small companies reflecting high raw material costs, logistics costs, and labor costs increased by 5.0, 4.6, and 1.5 percentage points respectively from the previous month. The operating costs of small companies have increased, and profit margins have been squeezed to a certain extent.

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   2. Non-manufacturing business activity index expansion slowed

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   In December, the non-manufacturing business activity index was 55.7%, which was 0.7 percentage points lower than the previous month, and remained at a relatively high level of above 55.0%. The non-manufacturing sector continued its steady recovery.

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   The business climate of the service industry remains at a relatively high level. The service industry business activity index was 54.8%, which was 0.9 percentage points lower than last month, but it was still at a high level of operation throughout the year. From the perspective of the industry, the business activity index of industries such as air transportation, telecommunications, broadcasting and television satellite transmission services, currency and financial services, and capital market services continues to stay in the high range of more than 60.0%, and the total business volume has grown rapidly. In addition, the business activity index of industries such as catering, real estate, ecological protection and environmental governance is below the critical point, and corporate business activities have slowed down. In terms of prices, the input price index and sales price index were 53.1% and 52.0%, respectively, up 1.2 and 1.1 percentage points from the previous month. Among them, affected by the significant increase in commodity prices, the producer service industry closely related to the manufacturing industry The two price indexes of China are significantly higher than the life service industry. In terms of market expectations, the business activity expectations index is 60.1%, which has been in the high boom range for six consecutive months, indicating that most service industry companies continue to be optimistic about the stability of the market.

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   The construction industry continues to maintain rapid growth. The business activity index of the construction industry was 60.7%, 0.2 percentage point higher than last month. Among them, the civil engineering and construction industry business activity index was 63.2%, an increase of 6.6 percentage points from the previous month, and production activities accelerated significantly. From the perspective of market demand, the new order index was 55.8%, 1.8 percentage points higher than last month, and rebounded for two consecutive months, indicating that the volume of new construction contracts signed by construction companies continues to grow and market demand is expanding steadily.

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   3. The comprehensive PMI output index is generally stable

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   In December, the comprehensive PMI output index was 55.1%, 0.6 percentage points lower than the previous month, and remained at a relatively high level of above 55.0% for 4 consecutive months, indicating that the production and operation activities of Chinese enterprises have continued to recover recently. The manufacturing production index and non-manufacturing business activity index that make up the comprehensive PMI output index are 54.2% and 55.7%, respectively.

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EDITOR’S NOTE: This article is a translation. Apologies should the grammar and/or sentence structure not be perfect.

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