Manufacturing Purchasing Managers' Index (PMI) in China by month May 2023

In May 2023, the Purchasing Managers' Index (PMI) in China resided at about 48.8 percent. An indicator of the economic health of the manufacturing sector, the PMI is based on five major indicators: new orders, inventory levels, production, supplier deliveries, and the employment environment. An index value above 50 percent indicates a positive development in the industrial sector, whereas a value below 50 percent indicates a negative situation.

The PMI as a major economic indicator

The Purchasing Managers' Index was first introduced by the US-based Institute of Supply Management in 1948. It has become one of the most widely used and closely watched indicators of business activities worldwide. The PMI is not only an apt indicator for manufacturing growth, it also supports interest rate decisions of central bank institutions. PMI figures around the globe were dominated by the COVID-19 pandemic in 2020. In the Euro area, the PMI recovered from a considerable drop in April 2020, regaining pre-crisis level in June. In the United States, the monthly PMI indicated an even better improvement from low values in April and March.

Recent PMI development in China

As is shown in the graph at hand, the PMI of China as the world’s second-largest economy dropped considerably in February 2020 due to the coronavirus pandemic. In March, the index indicated a striking rebound and ranged at a level slightly above 50 index points afterwards. During 2021, the index was characterized by a slightly downward trend. In 2022, the index displayed an unstable development with two significant dips in April and December, finally concluding with a strong rebound in January 2023. The non-manufacturing PMI in China displayed a similar development.