The China Manufacturing Purchasing Managers' Index (PMI), released by the China Federation of Logistics and Purchasing in collaboration with the National Bureau of Statistics' Service Industry Research Center, reached 50.3% in March 2014, marking a slight increase of 0.1 percentage points from the previous month. Among the 12 sub-indices, most showed improvement, including production, new orders, new export orders, purchases, raw material inventory, finished goods inventory, imports, employee levels, and overall production and operational activities. Notably, the import and new export orders indices rose by more than 1 percentage point, signaling positive momentum in foreign trade.
However, some indicators declined, such as the backlog of orders, purchase price, and supplier delivery time indices, with the purchase price index dropping the most—by 3.3 percentage points. Analyst Zhang Liqun commented that the PMI’s modest rise ended a three-month decline, suggesting that economic growth may stabilize. He noted that while seasonal factors likely contributed to the increase, the improvement in export-related indices indicates a better outlook for international trade. Meanwhile, the significant drop in the purchase price index suggests continued caution among businesses regarding market conditions.
Looking at the production index, it stood at 52.7%, up 0.1 percentage points from February. All enterprise sizes—large, medium, and small—reported figures above 50%, with 54%, 50.4%, and 50.7% respectively. The new orders index also increased slightly to 50.6%, but only large enterprises exceeded 50% at 51.9%, while medium and small firms remained below at 48.9% and 47.5%. The new export orders index rose sharply by 1.9 percentage points to 50.1%, with large enterprises performing best at 50.9%, while medium and small firms still lagged.
Other key indices included the backlog of orders at 44.8%, down slightly, and the finished goods inventory index rising to 48.3%. The purchase volume index improved significantly to 50.3%, with large enterprises leading at 51%, while small firms reported 47.9%. The import index increased by 2.6 percentage points to 49.1%, but all enterprise sizes remained below 50%. The purchase price index fell to 44.4%, reflecting cost concerns across the board.
Overall, the survey highlights a mixed picture of manufacturing activity, with some signs of recovery and continued caution. The expected index for production and operations rose to 62.7%, showing optimism for future business conditions. This data provides valuable insight into the health of China's manufacturing sector and its potential impact on the broader economy.
**About the PMI Survey**
The PMI is a key indicator used to gauge the health of the manufacturing sector. It is compiled monthly from surveys of purchasing managers across various industries. A reading above 50 indicates expansion, while below 50 signals contraction. The survey covers 31 major manufacturing sectors and uses a PPS sampling method to ensure representativeness. Each month, companies are asked about their production, orders, inventory, and other key metrics. The final PMI is calculated by weighting several sub-indices, with new orders carrying the highest weight. Seasonal adjustments are applied to ensure accurate trend analysis.
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