China has rolled out another monthly reading of business activity intended to provide a fuller picture of the state of the world's second-largest economy, the government said.
The National Bureau of Statistics on Wednesday unveiled the composite purchasing managers index, which covers both the service and manufacturing sectors, alongside their usual separate readings. The new gauge's weightings of each sector are based on their respective shares of the domestic economy, the bureau said in a statement.
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China's economy is in transition, becoming one driven more by services than by heavy industry. As the line between services and manufacturing has become blurry given the applications of big data, the mobile internet and other technologies, it is time for a "new perspective" to measure economic performance, the bureau said.
Economists have questioned the reliability of China's published statistics and economic indicators for decades. The central government has said that local governments have falsified data, usually to overstate their economic and fiscal performance. The provinces of Liaoning and Jilin, the city of Tianjin and parts of Inner Mongolia have acknowledged faking data.
Ning Jizhe, China's statistics chief, in January pledged to improve the quality of economic data by punishing offenses by local officials. He defended his bureau's statistics, saying they are reliable because the data are collected directly from companies and households.
The bureau said Wednesday that it had been compiling the new composite PMI for a year. January's reading stood at 54.6, which the bureau said was unchanged for the third straight month. It was well above the threshold value of 50 that separates expansion from contraction.
The traditional manufacturing PMI, a gauge of factory activity, showed sentiment at an eight-month low of 51.3 in January, compared with 51.6 the previous month. The nonmanufacturing PMI edged up to 55.3 from December's 55.0.
Economists said the downtick in manufacturing reflected softened demand after the Christmas and New Year's holidays in the West as well as factory disruptions from a pollution clampdown. The service sector was bolstered by solid demand ahead of February's Lunar New Year holiday, the statistics bureau said.
However, economists and analysts said it would likely take some time before the composite index is as closely watched as traditional indicators. Market observers typically favor economic data that have a long historical record, said Yang Zhao, an economist at Nomura Group, noting that the manufacturing PMI continues to get more attention than its newer services counterpart.
"I guess what the statistics bureau wants is to create a more representative indicator," Mr. Zhao said. Services now account for slightly more than half of China's economic output, with manufacturing contributing a third, according to official data.
The government's introduction of a composite PMI brings it in line with other countries that offer a similar gauge, the bureau said.
Private research firm Markit conducts both composite and sector-specific PMI surveys--whose results are released after the official readings--which offer China watchers a competing source of information.
(END) Dow Jones Newswires
January 31, 2018 07:43 ET (12:43 GMT)
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