PMI Dropped Slightly To 54 In August, The First Expansion After The Employment Epidemic In Service Industry

The Caixin China general service industry operating activity index (PMI) for August, released on September 3, recorded 54, down 0.1 percentage point from July, and was in the expansion range for four consecutive months.

The purchasing managers index (PMI) of Caixin China's manufacturing industry in August was 53.1, 0.3 percentage points higher than that in July. As the growth rate of manufacturing industry was greater than that of service industry, the comprehensive PMI of Caixin China rose 0.6 percentage points to 55.1 in August, the second highest since January 2011, only lower than that in June this year.

This trend is consistent with the Bureau of statistics PMI. The National Bureau of statistics released the business activity index of service industry in August rose 1.2 percentage points to 54.3, while the comprehensive PMI rose 0.4 percentage points to 54.5, a new high in the year.

The index of new orders of service industry continued to decline slightly in August, but it was in the expansion range for four consecutive months. During the month, sales growth of enterprises generally reflected that the return to work led to the increase in the number of customers. Supported by the continued rise in manufacturing orders, the composite new order index is still in the expansion range, although it is the lowest in recent three months.

The index of new export orders of the service industry was in the contraction range for two consecutive months, with a slight decline. According to the enterprises interviewed, the epidemic continues and global demand continues to be negatively impacted. The new export order index of the manufacturing industry rose into the expansion range for the first time after the epidemic, driving the decline of the total number of comprehensive new export orders narrowed.

In August, the employment contraction of service enterprises ended for six consecutive months, and the employment index returned to the expansion range. Due to the growth of new business volume, enterprises have increased employment. However, manufacturing enterprises are still cautious about increasing employment. In August, the employment index was in the contraction range for the eighth consecutive month, but the decline was slight. On the whole, the overall employment scale of the two industries has recorded expansion for the first time since this year.

In August, the overstock index of service enterprises returned to the contraction range, but the decline was slight. The surveyed enterprises said that the production capacity was sufficient in the month and could complete the orders in time. The backlog of manufacturing enterprises continued to rise, driving a small increase in the comprehensive backlog.

In August, the prices of service inputs continued to rise, and enterprises generally reflected that labor costs and raw material prices rose. The purchasing price index of raw materials in the manufacturing industry has been in the expansion range for three consecutive months. The comprehensive input cost continues to rise.

In August, the service industry's fee prices rebounded. The surveyed enterprises said that the charging prices were increased due to the increase in input costs. Although the increase was slight, it was the highest since December 2019. Manufacturers continued to raise the prices of their products slightly, and the prices of comprehensive output rose significantly, recording the highest value in nearly two years.

In August, the optimism of service enterprises dropped to the lowest level in nearly three months, but it was still in the expansion range. Many customers are expected to continue to recover from the epidemic. However, some enterprises believe that the epidemic will continue to affect their business operations and sales in the coming months.

Wang Zhe, a senior economist at Caixin think tank, said that the rapid recovery of manufacturing and service industries from the epidemic is still the main keynote of the current economic operation. In the past six months, the overall performance of foreign demand and employment was low. In August, employment in the service industry began to pick up, and the employment in the manufacturing industry was also close to the turning point. At present, there is still uncertainty in the development of overseas epidemic situation, or it still restricts the construction of international double circulation in or inside. In the post epidemic era, the improvement of employment needs the long-term recovery of the market and the long-term stable development expectation of entrepreneurs. In this process, the support of relevant macro policies is essential.