The Caixin Manufacturing Purchasing Managers’ Index (PMI) is an economic indicator that provides insights into China’s manufacturing sector.
The index gauges the health of the manufacturing industry, based on a survey of purchasing managers from small and medium-sized enterprises (SMEs).
What is Caixin Manufacturing PMI?
The Caixin Manufacturing PMI is a monthly survey of purchasing managers in the manufacturing sector in China.
It measures the level of activity in the manufacturing sector and is a leading indicator of economic growth in China.
The survey gathers responses from purchasing managers in small and medium-sized manufacturing companies, focusing on their perceptions of the sector’s performance in terms of production, new orders, employment, inventories, and suppliers’ delivery times.
It is an important indicator for investors and businesses. It can provide insights into the health of the Chinese economy and the potential for future growth.
The PMI is also used to track the effectiveness of government policies, such as those aimed at stimulating economic growth.
How to Read the Caixin Manufacturing PMI
The index is calculated using a weighted average of five sub-indices, with the following weights:
- New orders (30%)
- Output (25%)
- Employment (20%)
- Suppliers’ delivery times (15%)
- Stock of items purchased (10%)
A PMI reading above 50 indicates expansion in the manufacturing sector,
A reading below 50 signals contraction.
A reading at 50 suggests no change in the sector’s performance.
When interpreting the Caixin Manufacturing PMI report, consider the following factors:
- Index value: Assess whether the index is above, below, or at the 50-mark threshold. This will help determine if the manufacturing sector is expanding, contracting, or remaining stable.
- Trend direction: Compare the current month’s PMI value with the previous months to identify any trends, such as sustained growth or contraction in the sector
- Sub-indices: Analyze the performance of the five sub-indices to gain insights into specific areas of the manufacturing sector, such as new orders, output, and employment
- Comparison with other indicators: Examine the Caixin Manufacturing PMI alongside other relevant economic indicators, such as GDP growth and industrial production, to obtain a comprehensive understanding of China’s economic health.
Why is Caixin Manufacturing PMI important?
The Caixin Manufacturing PMI is important for several reasons:
- Timeliness: As a monthly indicator, it offers a timely snapshot of China’s manufacturing sector, allowing investors, policymakers, and analysts to monitor economic trends closely.
- Representativeness: By focusing on small and medium-sized enterprises, the Caixin PMI complements the official Chinese Manufacturing PMI, which primarily covers large enterprises.
- Global impact: As the world’s second-largest economy, China’s manufacturing performance can influence global trade, commodity prices, and financial markets. The Caixin PMI is a valuable tool for international investors and policymakers to assess the Chinese economy’s health.
Who publishes Caixin Manufacturing PMI?
The Caixin Manufacturing PMI is compiled by IHS Markit, a leading global provider of information, analytics, and solutions, in collaboration with Caixin Media, a prominent Chinese financial media group.
The data is based on a survey of purchasing managers from small and medium-sized manufacturing companies across China.
When is Caixin Manufacturing PMI released?
The Caixin Manufacturing PMI report is typically released on the first business day of each month, providing data for the previous month.
The report is available through Caixin Media’s website and various financial news outlets.
In addition, IHS Markit offers subscription-based access to detailed PMI data and analysis, catering to a range of professional users such as investors, economists, and researchers.