Ahead of the official PMIs, I posted about the differences between the official and Caixin PMIs. ICYMI, here it is again.

China’s National Bureau of Statistics (NBS) and Caixin/S&P Global PMIs (Purchasing Manager Indices) differ primarily in scope, methodology and focus of research. Here’s a breakdown of the key differences:

1. Provider and Affiliation

• NBS PMI:

  • Compiled by the National Bureau of Statistics of Chinagovernment agency.
  • Seen as official PMIclosely aligned with government policies and priorities.

• Caixin/S&P Global PMI:

  • Compiled Caixin Media in collaboration with S&P Global.
  • A private sector index, often considered more market driven.

2. Scope of research

• NBS PMI:

  • It focuses on large and state-owned enterprises.
  • It covers a wide range of industries, including manufacturing and non-manufacturing sectors (eg construction and services).
  • It reflects conditions in sectors that are heavily influenced by government policies and infrastructure spending.

• Caixin PMI:

  • It focuses on small and medium enterprises (SMEs)especially in the private sector.
  • It includes the performance of companies that are more exposed to market forces and less influenced by government interventions.

3. Size and composition of the sample

• NBS PMI:

  • Larger sample size, with approx 3,000 companies surveyed for the manufacturing PMI.
  • It emphasizes state-owned enterprises and larger enterprises, which tend to dominate traditional industries.

• Caixin PMI:

  • Smaller sample size, research around 500 companieswith a stronger focus on export-oriented and technology-driven companies.
  • Provides insight into the private sector and its sensitivity to global economic conditions.

4. Publication Dates

• NBS PMI:

  • It is usually issued monthly on the last day of the month.
  • Provides separate PMI for production and non-productive sectors.

• Caixin PMI:

  • Released a few days later, usually on the first working day of the following month.
  • Includes only manufacturing PMI and PMI serviceswith no equivalent for non-manufacturing activities such as construction.

5. Interpretation and Use

• NBS PMI:

  • It reflects the overall economic landscape, particularly trends in industries affected by government policy.
  • Analysts use it to assess the impact of fiscal and monetary policy on the broader economy.

• Caixin PMI:

  • It is considered a better indicator of health private sector and market-driven segments of the economy.
  • It is considered more sensitive to external shocks (eg global trade terms).

6. Key insights and differences in results

• The NBS PMI often reflects policy-driven stabilityshowing less volatility as it covers sectors that are cushioned by government support.
• The Caixin PMI can do more volatilebecause SMEs are more sensitive to real-time changes in market demand, supply chain disruptions and global economic changes.

Why both are important:

• NBS PMI offers a macroeconomic view of China’s state-influenced economy.
• Caixin PMI provides a microeconomic perspective of market-driven and globally competitive sectors.

By analyzing both, investors and policymakers can get a more comprehensive picture of China’s economic health and its underlying dynamics.