Bureau of Statistics: Manufacturing Is Recovering Steadily, but Uncertainty Remains

The Manufacturing Purchasing Managers' Index and the Non-Manufacturing Business Activity Index rose steadily in June.

Zhao Qinghe, senior statistician of the Service Survey Center of the National Bureau of Statistics, interprets the China Purchasing Managers Index for June 2020.

On June 30, 2020, the National Bureau of Statistics Service Survey Center and the China Federation of Logistics and Purchasing released the China Purchasing Managers' Index. In this regard, the National Bureau of Statistics Service Survey Center senior statistician Zhao Qinghe has been interpreted.

At present, various departments in various regions, in accordance with the party central committee and the State Council, do a good job of "six stability" work, implement the "six insurance" task, and strive to overcome the adverse effects of the outbreak of new crown pneumonia, China's overall economic recovery situation continued to improve. In June 2020, the Manufacturing Purchasing Managers' Index, the Non-Manufacturing Business Activity Index and the Composite PMI Output Index were 50.9%, 54.4% and 54.2%, respectively, all higher than the previous month.

First, the manufacturing purchasing managers' index rebounded slightly.

The manufacturing PMI was 50.9% in June, up from 0.3 percentage points the previous month, with 14 of the 21 sectors surveyed above the threshold, up five from the previous month, manufacturing steadily recovering and fundamentals continuing to improve. Highlights of the month:

First, the supply and demand sides continue to warm up. The production index and the new orders index were 53.9% and 51.4%, respectively, up 0.7 and 0.5 percentage points from the previous month, with the new orders index recovering for the second month in a row. From the industry situation, medicine, non-ferrous, general equipment, electrical machinery and equipment and other manufacturing new orders index and production index are significantly higher than last month, market demand improved, enterprise production momentum has been enhanced.

Second, the price index has increased. The purchase price index of major raw materials and the factory price index were 56.8% and 52.4%, respectively, up 5.2 and 3.7 percentage points from the previous month, both highs for the year. From the industry situation, oil processing, steel, non-ferrous and other upstream industries, both price indices were higher than the previous month, rose to a high of more than 60.0%.

Third, the import and export indices have improved. With the resumption of the global economy, China's manufacturing import and export index rebounded low this month, with the index of new export orders at 42.6%, up from 7.3 percentage points the previous month, and the rebound of more than 10.0 percentage points in seven manufacturing industries, such as paper printing, petroleum processing, general equipment, electrical machinery and equipment, and 47.0 percent, up 1.7 percentage points from the previous month, oil processing, chemical raw materials, chemical fibers and plastics, and other critical manufacturing industries.

Fourth, business confidence is basically stable. Although the index of production and business activity is expected to fall slightly, it still reaches 57.5%, indicating that manufacturing enterprises are more optimistic about the near-term market recovery. From the industry situation, oil processing, automobiles, special equipment, electrical machinery and equipment and other manufacturing production and operation activities expected to be higher than 60.0% for the second consecutive month.

Although the PMI index picked up this month and the manufacturing sector recovered steadily, it is also important to see that uncertainty remains. First, although the import and export index has improved for two consecutive months, but still below the critical point, the current overseas epidemic has not been effectively controlled, the external market still has variables. Second, some industries recovery pressure is still greater, textile, textile and clothing, wood processing and other manufacturing PMI continued to be located below the critical point. Third, small enterprises have greater production and operation difficulties, PMI of 48.9 percent, down 1.9 percentage points from the previous month, and reflect ingest orders of small enterprises than large and medium-sized enterprises.

Second, the index of non-manufacturing business activity continued to pick up.

The index of non-manufacturing business activity sat at 54.4% in June, up from 0.8 percentage points the previous month and the fourth straight month of recovery.

The service sector continues to improve. The business activity index for the service sector was 53.4%, up from 1.1 percentage points the previous month, and 15 of the 21 industries surveyed were above the threshold, with production and operation sourating in most sectors. Among them, transportation warehousing and postal services, information transmission software and information technology services, the financial industry at 59.0% and above, the volume of business has increased. The recent recovery in the manufacturing sector has further consolidated, leading to an increase in business volume in the related services sector, with the index of business activity in the productive services sector increasing by 4.5 percentage points this month from the previous month. With the recovery of production and living order accelerated, market confidence strengthened and demand for services continued to release, with the index of new orders rising 0.6 percentage points from the previous month to 52.3%. At the same time, the recovery in some service industries remains difficult, and the index of business activity in cultural, sports and entertainment and residential services remains below the threshold.

The construction industry continues to grow. The construction business activity index was 59.8%, down 1.0 percentage points from the previous month, but for the third consecutive month it was higher than 59.0%, and construction construction construction volume grew steadily. On the market's behest, the business activity expectations index was 67.8%, up 0.3 percentage points from the previous month, and business confidence in the industry's development increased.

Third, the composite PMI output index was higher than the previous month.

The composite PMI output index stood at 54.2% in June, up from 0.8 percentage points the previous month, as production operations continued to improve. The manufacturing production index and the non-manufacturing business activity index, which make up the composite PMI output index, were 53.9% and 54.4%, respectively, up from the previous month.