BEIJING, March 20, 2015 /PRNewswire/ -- China's largest companies reported a worsening in business confidence in March according to the latest MNI China Business Sentiment Survey.
The MNI China Business Sentiment Indicator, a gauge of current business sentiment, fell for the third consecutive month to 52.2 in March from 52.8 in February, leaving confidence at the lowest level since October last year. The slight weakening comes in spite of the recent stimulus measures implemented by the PBOC in February. A pick-up in new orders and comments by party officials indicating that there are more tools to contain the slowdown helped drag the Future Expectations Indicator from February's series low, placing it above the level of the current indicator, a sign that firms expect the situation to improve.
The weakness in overall sentiment belied some improvement in other key metrics in the survey. Most notably, Production and New Orders both picked up in March, following a plunge in February. Both indicators have lost momentum in 2015 after ending 2014 on a strong note on the back of increased infrastructure spending in December. Firms were relatively more upbeat about the coming quarter with both expectations indicators expanding at a faster rate.
Deflationary pressures intensified in March, with Input Prices plunging to the lowest since July 2013, wiping out nearly two years of gradual increases in one fell swoop in March. Over the last year, firms have commented that the aggregate price of their inputs has steadily expanded, primarily due to increased labour costs and burden from regulations outweighing falls in global prices for commodities.
Prices Received bounced slightly after hitting a six-year low in February, but remained in contraction for the eighth consecutive month. Companies' expectations for prices fell to the lowest since the series began in 2007, suggesting deflationary pressures are likely to continue in the near future.
"The March survey shows a mixed picture with headline sentiment easing but other key activity indicators stabilising. Still, the deflationary pressures evident in our survey and general softness in the data suggest the central bank should maintain its current easing bias," said Philip Uglow, Chief Economist of MNI Indicators.
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Naomi Pickens
Public Relations
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Editorial Content:
Philip Uglow
Chief Economist, MNI Indicators
Notes to Editors
Please source all information to MNI Indicators.
MNI China Business Sentiment is a monthly poll of Chinese business executives at companies listed on either the Shanghai or Shenzhen stock exchanges.
Companies are a mix of manufacturing and service sector firms.
With over five years of history, the survey tracks and predicts Chinese economic conditions and is an important leading indicator of GDP.
Respondents are asked their opinion on whether a particular business activity has increased, decreased or remained the same compared with the previous month as well as their expectations for three months ahead, e.g. is Production higher/same/lower compared with a month ago?
Diffusion indicators are then calculated by adding the percentage share of positive responses to half the percentage of those respondents reporting no change. An indicator reading above 50 shows expansion, below 50 indicates contraction and a result of 50 means no change.
Data is collected through computer aided telephone interviews (CATI) and around 200 companies are surveyed each month.
Series which show a seasonal pattern are seasonally adjusted using the US Census Bureau's X12 seasonal adjustment program. Seasonal factors are calculated annually.
About MNI Indicators
MNI Indicators, part of Deutsche Borse Group, offers unique macro-economic data and insight to businesses and the investment community. We produce data and intelligence that is unbiased, pertinent and responsive. Our data moves markets.
For more information, visit our website at www.mni-indicators.com.