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April 2012

PMI Report on China Manufacturing

CFLP

China Federation of Logistics & Purchasing (CFLP) is the logistics and purchasing industry association approved by the State Council. CFLPs mission is to push forward the development of the logistics industry and the procurement businesses of both government and enterprises, as well as the circulation of factors of production in China. The government authorizes the CFLP to produce industry statistics and set industry standards. CFLP is also Chinas representative in the Asian-Pacific Logistics Federation (APLF) and the International Federation of Purchasing and Supply Management (IFPSM).

PMI rose to 53.1% in March

Output, New Orders, New Export Orders, Backlogs of Orders, Purchases of Inputs, Stocks of Finished Goods, Imports, expanding. Stocks of Major Inputs, contracting. Suppliers Delivery, slower. China Manufacturing PMI, seasonally adjusted 11/12
Oct Nov Dec Jan Feb Mar

PMI
50.4 49.0 50.3 50.5 51.0 53.1

54 53 52 51 50 49 48 Oct 11 Nov Dec Jan 12 Feb Mar

NBS

The National Bureau of Statistics (NBS), an agency directly under the State Council in China, is in charge of the countrys statistics. It is responsible for formulating statistical policies and establishing the national statistical system, drafting and enforcing the statistical laws and regulations, setting up and improving the national economic accounting system, conducting censuses, as well as making statistical analyses and forecasts of the macroeconomy, social development, scientific advancement, resources and environment.

Chinas manufacturing PMI improved from 51.0% in February to 53.1% in March, the highest in twelve months. The index has stayed above the critical level of 50% for four consecutive months, indicating that the underlying momentum of the manufacturing sector in China has continued to improve. 10 of the 11 sub-indices were higher than their respective levels in the previous month. The new orders index rose strongly by 4.1 ppt. while the new export orders index gained 0.8 ppt. in March. The index readings indicated significant improvement in domestic demand. On the other hand, the input prices index went up from 54.0% in February to 55.9% in March, showing that upstream price pressures have increased. In March, 16 of the 21 industries recorded PMIs above 50%. On the other hand, 5 industries recorded index readings below 50%: Smelting of ferrous metals; Specialized machinery; Textiles; Wood processing, bamboo products & furniture; and Oil refining & coking & nuclear fuel processing. Output index went up from 53.8% in February to 55.2% in March. 14 of the 21 industries surveyed recorded expansion of output. On the other hand, 7 industries recorded contraction in output: Smelting of ferrous metals; Textiles; Chemicals; Wood processing, bamboo products & furniture; Oil refining & coking & nuclear fuel processing; Garments, footwear & related products: and Food, alcohol & tea manufacturing. New orders index was 55.1% in March, up strongly from 51.0% in February. 15 of the 21 industries surveyed registered expansion of new orders. On the other hand, 6 industries registered contraction in new orders: Textiles; Chemical fibres, rubber & plastics; Wood processing, bamboo products & furniture; Oil refining & coking & nuclear fuel processing; Non-staple food processing; and Garments, footwear & related products.

China Manufacturing PMI

The CFLP China Manufacturing Purchasing Managers Index (PMI) provides an early indication each month of economic activities in the Chinese manufacturing sector. The CFLP and the NBS collaborate to collect data, compile and publish the index.

Li & Fung Research Centre Helen Chin, Timothy Cheung (852) 2300 2471 helenchin@lf1937.com timothycheung@lf1937.com `

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PMI Report on China Manufacturing

April 2012

New export orders index rose to 51.9% in March, compared to 51.1% in February. 14 of the 21 industries surveyed recorded expansion in new export orders. On the other hand, 7 industries registered contraction in new export orders. Wood processing, bamboo products & furniture; Oil refining & coking & nuclear fuel processing; and Food, alcohol & tea manufacturing were the industries with index readings below 40%. Backlogs of orders index picked up to 50.5% in March, compared to 49.4% in February. 10 of the 21 industries surveyed recorded contraction in backlogs of orders. Wood processing, bamboo products & furniture was the industry with index reading below 40%. Stocks of finished goods index came in at 50.8% in March, up from 50.5% in February. Compared to the previous month, 12 of the 21 industries surveyed recorded higher stock levels, and 9 industries recorded lower stock levels. Purchases of inputs index reached 54.8% in March, compared to 53.6% in February. 17 of the 21 industries surveyed recorded more purchasing activities. Of which, 3 registered index readings above 60%: Metal products; Electrical machinery & equipment/ metal products machinery & equipment; and Automobiles. Imports index was 51.5% in March, up from 50.8% in February. 12 of the 21 industries surveyed recorded expansion in imports. On the other hand, 9 industries registered contraction in imports. In particular, Textiles was the industry with index reading below 40%. Input prices index rose to 55.9% in March, compared to 54.0% in February. 19 of the 21 industries reported increasing input prices. Only 2 industries reported decreasing input prices: General machinery and Chemical fibres, rubber & plastics. Stocks of major inputs index went up from 48.8% in February to 49.5% in March. Of the 21 industries surveyed, 12 recorded lower stock levels; while 9 industries recorded higher stock levels. Employment index was 51.0% in March, up from 49.5% in February. 16 of the 21 industries surveyed reported increases in employment, while 5 industries reported decreases in employment. Suppliers delivery time index dropped by 1.4 ppt. from the previous month to 48.9% in March. 6 of the 21 industries reported faster suppliers delivery, while 15 industries recorded slower suppliers delivery. In general, a reading above 50% implies faster delivery and a cooling-down economy; below 50%, slower delivery time and a booming economy.

China Manufacturing at a Glance March 2012

Index S. Adj Index Index Compared with the Previous Month Direction

PMI Output New Orders New Export Orders Backlogs of Orders Stocks of Finished Goods Purchases of Inputs Imports Input Prices Stocks of Major Inputs Employment Suppliers Delivery Time

53.1 55.2 55.1 51.9 50.5 50.8 54.8 51.5 55.9 49.5 51.0 48.9

Higher Higher Higher Higher Higher Higher Higher Higher Higher Higher Higher Lower

Expanding Expanding Expanding Expanding Expanding Expanding Expanding Expanding Expanding Contracting Expanding Slackening

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PMI Report on China Manufacturing About China Manufacturing PMI:

April 2012

China Manufacturing Purchasing Managers Index (PMI) provides an early indication each month of economic activities in the Chinese manufacturing sector. It is jointly published by China Federation of Logistics & Purchasing (CFLP) and the National Bureau of Statistics (NBS). Li & Fung Research Centre is responsible for drafting and disseminating the English PMI report. Every month questionnaires are sent to over 800 manufacturing enterprises all over China. The data presented herein is compiled from the enterprises responses about their purchasing activities and supply situations. CFLP makes no representation regarding the data collection procedures, nor does it disclose any data of individual enterprises. The PMI should be compared to other economic data sources when used in decision-making. 820 manufacturing enterprises in 21 industries from Eastern, Central and Western China are surveyed. The sampling of the enterprises involves the use of Probability Proportional to Size Sampling (PPS), which means the selection of enterprises surveyed is largely based on each industrys contribution to GDP, and the representation of each geographical region. Survey responses reflect the change of each indicator, if any, in the current month compared to the previous month. There are 11 indicators in the survey: Output, New Orders, New Export Orders, Backlogs of Orders, Stocks of Finished Goods, Purchases of Inputs, Imports, Input Prices, Stocks of Major Inputs, Employment and Suppliers Delivery Times. For each of the indicators, this report shows the percentage of enterprises reporting each response, the difference between the percentage of responses in the positive economic direction and the negative economic direction, and the diffusion index. The diffusion index is the sum of the positive responses plus a half of those responding the same. Diffusion indices have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change and the scope of change. An index reading above 50% indicates an overall positive change in that variable; below 50%, an overall negative change. The PMI is a composite index based on the seasonally adjusted diffusion indices for five of the indicators with varying weights: New Orders30%; Output25%; Employment20%; Suppliers Delivery Times15%; and Stocks of Major Inputs10%. A PMI reading above 50% indicates an overall expansion in the manufacturing sector; below 50, an overall contraction. Currently there are 22 countries and regions conducting the PMI survey and compilation, based on an internationally standardized methodology.

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