China Manufacturing PMI Rises Again
By Suyang Zhou - Research Analyst
China's manufacturing and non-manufacturing PMI moved oppositely in Aug, 2017, of which manufacturing PMI climbed 0.3 ppt to 51.7%, reaching its second highest level this year. While non-manufacturing PMI declined 1.1 ppt to 53.4% due to “unfavorable weather conditions” according to the official statement, it was still within the prosperous band.
Looking into manufacturing PMI by enterprise category, PMI in large enterprises saw slight decline to 52.8%. By contrast, PMI in medium- and small-sized enterprises bounced back to 51.0% and 49.1%, respectively in August, twisting the slipping trend in the previous two months.
Drilling into the composition of manufacturing PMI, production (54.1%) and new orders (53.1%) were major drivers, rising 0.6 ppt and 0.3 ppt respectively thanks to improved demand from home and abroad. Meanwhile, material inventory (48.3%) edged down by 0.2 ppt, indicating continuous depletion of industrial inventories. By contrast, employment (49.1%) and supplier deliveries (49.3%) were the biggest laggards amid shrinking recruitment and longer delivery time of raw materials in the manufacturing industry.
Domestic orders, as is measured by the difference between new orders and new export orders, bounced back for two months in a row; another indication of improved domestic demand.
The difference between material and finished goods inventory, the so-called manufacturers' willingness of re-stocking, was picking up further in August thanks to ongoing inventory depletion.
And finally, as leading indicators of producer price index (PPI), output and input prices were moving up significantly. This implied that upcoming PPI for August could be strongly underpinned.