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What is behind different PMI statistics?

(Xinhua)
Updated: 2009-04-09 11:08

When asked to explain the difference in the recently released Purchasing Managers' Index (PMI) of China's manufacturing sector, the China Federation of Logistics and Purchasing (CFLP) insisted it had a broader coverage and reliable survey process.

According to CFLP's figure, China's PMI rose for the fourth straight month in March to 52.4 percent, up 3.4 percentage points from a month earlier.

Related readings:  PMI of manufacturing sector rebounds above 50% in March  Chinese manufacturing bobbing along the bottom  PMI may rise to 54 this month, CICC says  CLSA's China PMI edges up in Dec from record low

It is the first time in seven months that the figure stood above 50. As a barometer of domestic economic performance, a reading of above 50 in PMI suggests expansion, while one below 50 indicates contraction.

But brokerage CLSA's PMI survey suggested a reverse trend. It dipped to 44.8 percent in March from 45.1 in February.

Chen Zhongtao, a senior economist of CFLP told Xinhua that both organization used the same analyzing methods, but the difference came mainly from sampling disparities.

CFLP surveyed 730 companies, which provided a broader coverage compared with CLSA's some 400, he said.

The sampling of the official figure had ensured the survey covered large, medium-sized and smaller enterprises, said Chen.

CLSA's head of economic research department was not available for comment when Xinhua called. In a research note provided to Xinhua by the firm, it admitted the gap in size, but insisted the difference was caused more by the adjustment to data for seasonality.

"It is true that the CFLP survey sample size is larger than that of the CLSA China PMI...therefore the standard error of the (population) estimates from the CFLP survey should be around 25 percent smaller than those from the China PMI," said the note released on April 1.

"However in practice all of this is academic. Differences in the samples are dwarfed by differences in how each set of statisticians adjust for seasonality in the data," said the note.

CLSA said it had tuned the March figure as the February and March varied in number of days in a month and the latter month affected by the long Chinese lunar New Year holiday.

Though both sides made seasonality adjustment, the CFLP figure was usually boosted by around three points by seasonality in March, said the CLSA note.

Yu Ying, general manager of CLII, which carried out the PMI survey for CFLP, admitted the CLSA figure had smaller short-term fluctuations, if the historical figures from the two sides were compared.

"The March figure is within our estimate, when the February figure had recovered to 49 percent," said Yu.

The seasonality influence did affect the March figure of CFLP, as manufacturers usually had peak output in March and April, said Yu.

Despite the seasonal factor, Chen believed the consecutive rise for four straight months of CFLP figure was mainly in accordance with the national economic trend.

NBS head Ma Jiantang echoed his opinion. "The continuous rebound of the PMI not only shows the government economic stimulus package has begun to take obvious effect, but also indicates a stabilizing and warming economy," Ma said.

As a joint conductor of the survey, the National Bureau of Statistics helped CFLP to ensure the survey be carried out through reliable channels.

Zhang Liqun, researcher with development Research Center of the State Council, said the rising trend of the PMI indicated improvement in overall economic performance and would continue in the second quarter with stimulus policies continuing to pay off.

"The fact that the PMI rebounded above 50 percent in March, especially that the indices for output and new orders have stood above 50 percent for two consecutive months since February, implied future acceleration in the country's economic growth," Zhang said.