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The Sales Managers Index: China

The First Data on Economic Activity Levels in China - Every Month

Released: 22 June 2020

Sales Managers Report a Continuing Fall in Activity in June

  • The China Sales Managers Headline Index remains well below the 50 "no growth " level for the 5th consecutive month.
  • The Market Growth Index remains well below 50 and fell further in June.
  • The Staffing Index remains embedded in negative territory for 5th consecutive month.
  • The Services sector Indexes are reflecting a greater decline than Manufacturing.

Recent comment on the Sales Managers Indexes suggests that some readers are forgetting that the questions asked of the panel vary in nature. In normal circumstances this matters very little, but in today's harsh climate it is worth re-defining the questions and their meaning.

The Business Confidence Index asks about how confident panelists feel about the next few months. In the dire circumstances of recent months, it is entirely normal that business people hope the next 2-3 months will see an improvement in business conditions. But the crucial word here is "hope" . So the positive Business Confidence reading seen in June suggests something rather different to succeeding questions.

The question relating to the markets in which panelists are working , asks simply if markets served are growing, stable or in decline (note: no time period is specified). This question produced the most negative answer of all the questions asked in June. Furthermore the number of respondents reporting worsening conditions rose, after several months of negative replies. This is not an optimistic result. Few respondents see their markets as buoyant, indicating that Covid-19 related problems are far from over.

Answers to the question relating to respondents Sales has for two consecutive months turned very modestly positive , which is obviously a good sign. But we believe relates more to an increased ability to service and fulfil orders (but not the presence of actual orders in the quantities seen pre Covid-19), as plants and offices reopen, and to the fact that this question relates specifically to the current month in relation to the previous month. A bad month followed by a slightly less bad month will produce a positive 50+ result, but does not suggest an increase in economic activity, particularly when seen in the context of the previous question.

The Staffing Index is also of considerable significance this month. Like the Market Index, Staffing remains deep in negative territory, with few respondents appearing to have need of more people as of June. Again this suggests that the poor months immediately following the outbreak of the Coronavirus have not been followed by resurgent demand, but by the cautious reopening of existing plants and offices.

In general panelists report an economy largely re-opened and ready to produce, but still waiting for the foreign orders that previously made up a sizeable section of overall economic activity. Conditions do appear to be getting better, but very slowly

China: Staffing Levels Index

The Staffing Levels Index monitors the level of growth or decline in employment against the same period a year earlier.


 
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