BEIJING, June 19, 2015 /PRNewswire/ -- Following the increased pace of monetary policy easing since November, Chinese firms gave one of the clearest signs yet that business conditions are beginning to stabilise, according to the June edition of the MNI China Business Sentiment Survey.
The MNI China Business Sentiment Indicator, a gauge of current business sentiment, increased 7.6% on the month in June to 53.5, building on May's gain. Confidence now stands at the highest since the start of the year, before the reality of softer economic growth took its toll on our panel of large Chinese companies. Firms remained optimistic about the future, with elevated expectations of further easing contributing to a 7.4% rise in the Future Expectations Indicator.
Credit conditions improved notably in June, following the three rate cuts and 150 basis points worth of cuts to the reserve ratio requirement since the final quarter of last year. Spurred by the most recent rate cut in May, firms reported that their access to credit was the highest since August 2014 and a higher proportion of companies reported that the cost of loans had decreased between May and June.
Measures of output and demand recovered further in June, but are still well off the levels recorded at the end of last year, reflecting the continued lull in activity. Firms also cut back their forecasts for production and new orders following a significant upward revision in the month before.
Disinflationary pressures were again at the fore in June as Input Prices fell further to the lowest since August 2009, following successive plunges since January. In contrast the Prices Received Indicator, a measure of output prices, increased for the second consecutive month. While it continues to indicate that prices are declining, the rate of decline has decreased, easing the price squeeze companies have felt.
"The results of the latest MNI China Business Sentiment Survey provide some encouragement that the pro-active policies taken by the Chinese authorities are starting to have an impact. Still, activity is running below trend and disinflationary pressures continue suggesting that economic growth will remain relatively subdued in the near future," 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.
