China Suspends PMI Details in New Hurdle for Analysis: Economy
China suspended the release of industry-specific data from a monthly survey of manufacturing purchasing managers, with an official saying there’s limited time to analyze the large volume of responses.
“We now have 3,000 samples in the survey, and from a technical point of view, time is very limited -- there are many industries, you know,” Cai Jin, vice president of the China Federation of Logistics & Purchasing, which compiles the data with the National Bureau of Statistics, told reporters yesterday in Beijing.
The disappearance of data on industries including steel adds to issues hampering analysis of the world’s second-biggest economy, after fake invoices inflated trade numbers this year. Neither the federation’s nor the statistics bureau’s statement on the manufacturing Purchasing Managers’ Index this week gave readings on export orders, imports and finished-goods inventories or an explanation for the omissions.
“Suspension of the monthly data, without prior notice, makes the research work difficult for us,” Xu Xiangchun, a steel researcher and chief analyst at Mysteel.com, said by phone from Beijing. “The random absence of official data is disorienting.”
The State Council, headed by Premier Li Keqiang, said today the economy is stable although there are “outstanding structural problems.” In a statement issued before a briefing in Beijing, it pledged to maintain a reasonable supply of money and credit to the economy while still following a “prudent” monetary policy stance.
The industry-specific PMI readings have only been available via paid subscription, while the broader data are issued via press releases.
Ding Shuang, senior China economist at Citigroup Inc. in Hong Kong, said earlier this week that he subscribes to the industry-specific PMI readings, and the logistics federation told him in a July 1 e-mail that the figures would be “temporarily” suspended without giving a reason.
Cai said the suspension wasn’t permanent. He didn’t elaborate on the reason for the decision beyond rejecting the idea that it was because the data showed too much weakness.
The statistics bureau didn’t respond to e-mailed or faxed questions seeking comment.
The logistics federation increased the number of companies in its manufacturing survey to 3,000 from 820 starting with January’s reading and also regrouped the industries into 21 categories from 31. The latest release referred to 31 industry groups.
The sub-indexes for exports, imports and inventories became available after the initial release in a separate data feed from the China Economic Information Service, Citigroup’s Ding said. The Fung Business Intelligence Center, which is part of Fung Group, said in its monthly English-language release that the export orders gauge was at 47.7, which would be the lowest reading since February.
A separate manufacturing PMI released by HSBC Holdings Plc and Markit Economics is based on a survey of more than 420 companies.
“What happened with the missing subcomponents is definitely not good for the credibility of the official PMI,” said Louis Kuijs, chief China economist at Royal Bank of Scotland Group Plc in Hong Kong, who previously worked for the World Bank. “For the moment I would still put a lot of attention on it because it gives me a good health checkup on what is going on at the moment in the industrial sector.”
The HSBC-Markit PMI is “pretty good at giving us a good health check on the export-oriented sectors but it is a little bit more erratic than the official one,” Kuijs said.
Less information makes it more difficult to assess the magnitude of an economic slowdown at risk of deepening because of a cash squeeze in the interbank market that sent borrowing costs soaring last month. The issues with trade data this year added to broader skepticism of the nation’s statistics.
Economists in a May survey by Bloomberg News said January-April export growth was overstated by 4 to 13 percentage points, while Bank of America Corp. estimated the trade surplus for the period was one-tenth the official figure. Shen Danyang, a Commerce Ministry spokesman, said last month that data on trade with Hong Kong were inflated by arbitrage transactions that skirted rules.
The benchmark Shanghai Composite Index of stocks was little changed today, while the MSCI Asia Pacific Index rose 1.1 percent at 5:41 p.m. in Tokyo.
Elsewhere in Asia, Taiwan’s inflation eased to a 16-month low in June, a report showed today. In the Philippines, gains in consumer prices accelerated to 2.8 percent last month from 2.6 percent in May. Malaysia’s exports fell for a fourth month in May as the country shipped less crude petroleum and fewer electronics products.
In Europe, German manufacturing orders probably rose in May from the previous month, based on a Bloomberg News survey of analysts. The U.S. unemployment rate probably fell to 7.5 percent in June and payrolls rose by 165,000 workers, according to the median estimates of economists.
Earlier this week, a person involved in producing PMI data on China’s steel industry said that the release was suspended after the statistics bureau decided to change how the figures are compiled.
It isn’t yet clear what changes will be made and in what time frame, or if the data for July would be released next month, said the person, who asked not to be identified as he wasn’t authorized to speak publicly about the matter.
The monthly steel PMI, released by the statistics bureau together with the logistics federation and Shanghai-based Xiben New Line, measures production, orders and inventories in the industry. It rose to 46.8 in May from 45.1 in April. A reading below 50 indicates contraction.
China is the world’s largest producer of steel. It accounted for 49.18 percent of worldwide crude steel production in May, according to the World Steel Association. Japan, the second-largest producer, accounted for 7.06 percent, the data showed.
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