BEIJING, Nov. 19, 2015 /PRNewswire/ -- The Chinese business environment remains uncertain, according to executives at China's largest firms. Confidence pulled back in November after surging in the month before as a fall in demand outweighed the positives from cheaper credit and a reported improvement in companies' financial positions.
The MNI China Business Sentiment Indicator, a gauge of current business sentiment, fell 10.3% to 49.9 in November from 55.6 in October, slipping below the 50 neutral level for the second time this year.
As has been the case for most of 2015, the move in the overall indicator dwarfed the more subdued moves in key activity measures, indicating that sentiment continues to take its cues from external factors rather than realised demand and output. Still, New Orders and Production also fell by 6.6% and 4.2% respectively in November.
Although any confidence boost from previous supportive policy announcements appears to have faded, firms continued to report that monetary easing to date is flowing through. Interest Rates Paid fell to the lowest since 2009 while the Availability of Credit Indicator rose further. The expectations measures for both indicators also shifted more towards an easing bias, suggesting that companies expect more policy adjustment by year end.
Furthering the case for more interest rate cuts, disinflationary pressures were once again at the fore in November. Input Prices fell 17.8% to 45.6, matched by a 9.9% drop in Prices Received, which now stands at the lowest since 2008.
In spite of heightened expectations for more stimulus measures among the business community, expectations for the future remain bleak. The Future Expectations Indicator fell 12.3% to 51.2 in November from 58.4 in October, back close to September's series low.
"Currently we're seeing increased volatility in business sentiment brought on by a range of factors, not least the uncertain economic outlook. In spite of the instability in many areas though, business is finding some support in the easier credit environment while new orders and output remain elevated by historical standards. Still, the latest result confirms that the business backdrop is fragile and further stimulus is warranted, particularly given the renewed disinflationary tone struck in November's survey," said Philip Uglow, Chief Economist of 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.
