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CLSA China Manufacturing PMI


Key points:

Historical overview:



The headline CLSA China Manufacturing PMI™ remained above the neutral 50.0 level for the fourth month running in July, up from 51.8 to a twelve-month high of 52.8. The improvement in the PMI, which has risen over ten index points since the start of the year, pointed to a further acceleration in the pace of recovery of the Chinese manufacturing sector.

July data indicated that Chinese manufacturing production rose for the fourth month in succession, expanding at the most marked rate since May 2008. Those firms that reported output growth generally attributed this to continued gains in new business and further signs of economic recovery. Volumes of incoming new work received rose at the fastest rate for fourteen months in July, a noticeable improvement compared to the steep declines seen in late 2008 and at the beginning of 2009. It was the fourth month running in which firms’ order book positions improved. Despite rising for a second successive month, external demand remained lacklustre in July. Demand for manufactured goods was reported to have centred on the domestic market, with a number of panellists reporting that the global economic slump was still having a negative impact upon export sales.

Latest data signalled that capacity pressures continued to build, with July marking the fourth month running in which backlogs of work have risen. Outstanding business growth was the sharpest in just over a year, led principally by continued gains in new work.

In response to rising new and outstanding business volumes, Chinese manufacturers recruited additional workers for the second consecutive month in July. Although only modest, job creation was the strongest for fourteen months.

Improved demand conditions boosted companies’ pricing power in July, highlighted by the first rise in prices charged in just under a year. Anecdotal evidence suggested that firms had raised their output charges in response to higher input costs. According to the latest data, input price inflation was registered for the first time since September last year. Strong growth of input prices was in contrast to the considerable declines registered around the turn of the year. Survey responses suggested that more expensive raw materials had placed upward pressure on firms’ cost burdens.


Commenting on the China Manufacturing PMI survey, Eric Fishwick, Head of Economic Research at CLSA said:

“Manufacturing activity continues to accelerate and, importantly, orders growth is being driven by the domestic economy. This is a positive as Chinese exports are now underperforming those of the north Asian NIEs supporting the panel’s description of export demand as “lacklustre”. Output and input prices rose for the first time in 11 months. Export prices lag, another sign of China looking inwards for growth.”



About CLSA Asia-Pacific Markets

CLSA Asia-Pacific Markets is Asia’s leading, independent brokerage and investment group. The company provides investment banking, capital markets, equity broking and asset management services to global corporate and institutional clients.

Founded in 1986 and headquartered in Hong Kong, CLSA’s major shareholder is France’s Credit Agricole, which merged with Credit Lyonnais in 2003 to form the eighth-largest bank in the world by Tier-One capital and the sixth-largest bank by assets.

CLSA has had a longstanding commitment to China with an active presence there since 1990 and in 2003 China Euro Securities Limited (CESL), the first Sino-foreign joint venture received a licence to underwrite A and B share and Renminbi denominated bond offerings in China’s domestic securities markets, was established between CLSA and Fortune Securities Co Ltd. CESL was the first JV to be created under the new regulations introduced by the China Securities Regulatory Commission in 2002 following China’s accession to the WTO.

In June 2008, CESL was again the first to be granted a Securities Broking Licence (Restricted to Yangtze River Delta Area) and a Securities Investment Consultancy Licence by the China Securities Regulatory Commission. These two licences permit CESL to commence a fullservice institutional research, sales and broking business for domestic and international clients who wish to buy and sell A shares trading on the Shanghai and Shenzhen stock exchanges.

CLSA’s China research team is consistently ranked for their in-depth coverage of over 115 listed mainland Chinese companies. CLSA has completed over 170 China-related equity capital markets fund raising in the international capital markets since 2002.

For further information, please contact:

Simone Wheeler, Head of Communications
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Email simone.wheeler@clsa.com