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Recent Chinese Manufacturing PMI Reveals Opportunity for US Companies

Even though China’s economy has slowed somewhat, there is still opportunity for US companies looking to manufacture there without fear of instability.

Due to the effects of an aggressive stimulus buoying manufacturing and construction activity, the meltdown that some had forecast, is proving to have been avoided. The most recent updates to China’s Purchasing Managers’ Indexes (PMI), suggest that even while the overall pace of Chinese manufacturing has slowed, stability and opportunity remains.

The Purchasing Managers Index: What It Is and Why It Matters

In the USA, the non-profit Institute for Supply Management (ISM) surveys hundreds of American purchasing managers each month on 5 major indicators:

  • Newly placed orders
  • Existing inventory numbers
  • Current production levels
  • Recent deliveries from suppliers, and
  • Employment totals

The ISM compiles these figures and compares them against previous numbers to produce a PMI that many investors consider the benchmark for the economic health of the manufacturing sector.  An index of 50.0 represents no change in overall activity from the previous month.  Numbers above or below 50.0 indicate growth or contraction, compared to the previous measurement period. The ISM’s PMI has proved useful to the point that the model has been duplicated in other parts of the world, such as China, as a measure of economic health.

China’s Two PMI Measures Tell Slightly Different Stories, Both Positive

There are actually two PMI figures that reflect Chinese manufacturing activity. The country’s National Bureau of Statistics polls larger manufacturers with a resulting emphasis on state-owned enterprises. Beijing’s Caixin Media Company puts together an alternative manufacturing PMI, focusing on smaller, private service sector companies.

In recent months both measures have held near forecasts, suggesting a degree of stability even though a return to consistent growth has not yet been achieved. The official 2016 PMI totals have hovered around the 50.0 mark beginning 2016 at 49.4, rising to 50.2 in March, and slightly declining to 50.0 in June.  The 2016 Caixin PMI numbers began at 48.4 and jumped to 49.7 in March with the downward trend in June being 48.6.

Taken together, analysists note these numbers indicate the larger and state-owned manufacturing concerns continue to hold more steadily, while smaller and privately held operations are still experiencing some erosion. Some analysists reason the figures show that China’s stimulus efforts appear to be working, and the fairly ambitious growth targets can still be met.

Getting Involved in China with Expert, Effective Help

These recent PMI figures also suggest that now is the time to take advantage of these trends.  With many companies in China eager for new manufacturing business, this may be an especially good time to get involved.

ITI Manufacturing makes it easy to gain all the competitive advantages that come with China manufacturing.  ITI helps clients cut costs and improve margins without the complication or uncertainty.

  • Over 40 years of experience in China – consumer goods, as well as commercial, and industrial items.
  • Bilingual personnel and staff covering every industrial region.
  • Qualified, proven Chinese manufacturing partners.
  • Rigorous quality assurance, pre and post production.
  • Issues solved face-to-face at the manufacturing facility.

ITI’s full-service approach enables clients to:

  • Easily expand production without large investments.
  • Add new products for a fraction of what it would cost domestically.
  • Lower total cost of manufacturing with a “no manufacturing defects” guarantee.
  • Make “running changes” to existing products with ease and confidence.

Chinese manufacturing is made simple and straightforward by ITI.  With a NO COST quote, you will know what your savings will be before you commit to production.

ITI Manufacturing can help you discover profitable new opportunities. Take advantage of the recent PMI numbers that indicate this is an opportune time to investigate China manufacturing.  Contact us today!

By | 2017-03-20T10:19:50+00:00 July 21st, 2016|ITI News|

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