Producer Price Index
Producer Price Index PPI
(In China, PPI also refers to the ex-factory price index of industrial products)
The main purpose of the Producer Price Index (PPI) is to measure the price changes of various commodities at different stages of production. Unlike the CPI, which differs from the CPI in terms of price allowances, profitability, and tax burden, resulting in a gap between what producers get and what consumers pay, the PPI rises in response to an increase in the CPI, typically with a delay. Despite its diverse mix, it is generally believed that this delayed nature makes it possible to rough-and-ready estimate tomorrow's CPI inflation based on today's PPI inflation.
The Producer Price Index (PPI) is a measure of the prices of purchases made by producers during the production process; thus, the index includes information on the prices of raw materials, semi-finished goods, and final products (the U.S. employs about 3,000 items) at three stages of production. (In the past, the measure of wholesale prices of bulk materials was called the Whole sale Price Index (WPI), which is the precursor of the Consumer Price Index (CPI: a measure of the price of goods and services from the standpoint of consumers).
After removing food and energy, it is called the "Core PPI" (Core PPI) index in order to correctly determine the real trend of prices - this is because food and energy prices have always been subject to seasonal and supply-demand influences, and fluctuate dramatically.
Theoretically, price fluctuations in the production process will be reflected in the price of the final product, so looking at the movement of the PPI will help to predict future price changes, hence the importance of this indicator to the market.
Chinese companies' profit margins have stabilized at post-rise levels, and the fact that the PPI has grown faster than the CPI has not led to a contraction in profits. If we use the ratio of total net profit to sales to express the average profit margin of Chinese enterprises, then we can see that the profit margin of Chinese enterprises has begun to rise since 2003. And despite the big increase in raw material costs in recent years, profit margins are still at cyclical highs. Empirical studies show that there is a clear positive correlation between corporate profit margins and the PPI-CPI growth differential, contrary to what many believe, and that this positive correlation also exists in downstream industries. If there is indeed empirical causality between corporate profit margins and the PPI-CPI growth differential, then the fact is that faster PPI growth tends to imply higher profit growth, according to the data.
Consumer Price Index
Consumer Price Index (CPI)
Consumer Price Index (CPI) is an index commonly compiled in countries around the world, which can be used to analyze the basic dynamics of the market price, and is an important basis for the government to formulate the price policy and wage policy.
Concept of Consumer Price Index
Consumer Price Index (CPI) is a statistical indicator of price changes reflecting the prices of products and services related to the lives of residents, and is usually used as an important indicator for observing the level of inflation. China called the consumer price index. The consumer price index can be compiled by urban and rural areas respectively, the urban consumer price index and the rural consumer price index, and can also be compiled by the whole society as the national consumer price index. The CPI tracks the cost of living over a certain period of time to calculate inflation. An excessive rise in the CPI indicates that inflation has become a destabilizing factor for the economy and that there is a risk that the central bank will tighten its monetary and fiscal policies, thereby creating an uncertain economic outlook. As a result, excessive rises in the index are often not welcomed by the market.
For example, if the Consumer Price Index has risen 2.3 percent over the past 12 months, that means the cost of living has risen by an average of 2.3 percent from 12 months ago. When the cost of living goes up, the value of your money goes down. So, a $100 bill you received a year ago would only buy $[100/(1+2.3%)] worth of goods and services today.
The Consumer Price Index (CPI) includes the prices of necessities such as food, new and used automobiles, gasoline, housing, college tuition, utilities, clothing, and medical care. In addition, the CPI mixes in the cost of some of life's pleasures, such as tickets to sporting events and dinners at fine restaurants.
The Role of the Consumer Price Index
1. Reflecting Inflation
The severity of inflation is reflected by the rate of inflation, which shows how much the prices of goods have continued to rise over a certain period of time. The rate of inflation is generally expressed in terms of the Consumer Price Index (CPI).
Consumer Price Index (CPI) for the reporting period - Consumer Price Index (CPI) for the base period
Inflation rate = ----------------------------------------------- X 100%
Consumer Price Index (CPI) for the base period
2. Reflecting the change in purchasing power of money
The purchasing power of money is the amount of consumer goods and services that can be purchased per unit of money. As the CPI rises, the purchasing power of money falls; conversely, it rises. The reciprocal of the Consumer Price Index is the money purchasing power index.
1
[[Money Purchasing Power Index]] = ---------------- X 100%
Consumer Price Index
3. Reflecting the impact on workers' real wages
An increase in the Consumer Price Index means a decrease in real wages, and a decrease in the Consumer Price Index means a real wage increase. Therefore, the Consumer Price Index can be used to convert nominal wages into real wages using the formula
Nominal Wages
[[Real Wages]] = ---------------------
Consumer Price Index
Purchasing Managers' Index
(Redirected from Purchase Management Index)
Purchasing Managers' Index (PMI)
Purchasing Managers' Index (PMI)
What is the Purchasing Managers' Index
The Purchasing Managers' Index (PMI)
Purchasing Managers' Index (PMI), which is usually referred to as the Purchasing Managers' Index for the United States. It is a measure of the U.S. manufacturing industry's "medical checklist", is a measure of the manufacturing industry in production, new orders, commodity prices, inventories, employees, orders for delivery, new export orders and imports and other eight aspects of the status of the index is a very important subsidiary indicator of the economic indicators is the U.S. Institute for Supply Management ISM Business Report on the manufacturing industry. It is one of the main parameters of the Institute for Supply Management's ISM Business Report on the manufacturing sector. Usually the purchasing managers index and metal demand indicators are closely positively correlated, and therefore can be regarded as an effective indicator of changes in the growth rate of metal demand.
The PMI is a comprehensive economic indicator that summarizes overall U.S. manufacturing conditions, employment, and price performance, and is one of the most widely watched economic data in the world. In addition to the focus on the overall index, the Purchasing Managers' Index (PMI) Prices Paid Index and Prices Received Index are also considered to be a type of price indicator, while the Employment Index is often used to predict the unemployment rate and the performance of the non-agricultural workforce. At the same time, PMI is a forward-looking indicator with great predictive power for Asia and China's exports. PMI has been an internationally recognized macroeconomic monitoring indicator system, which plays an important role in monitoring and forecasting national economic activities. Purchasing Managers' Index (PMI) is the first major data release of the month, and because it reflects a more comprehensive picture of economic conditions, the market attaches great importance to the specific results reflected in the data. In a general sense, the purchasing managers index rose, will bring the dollar exchange rate rose; purchasing managers index fell, will bring the dollar exchange rate fell.
The advantages of the Purchasing Managers' Index
1.Timeliness.
One of the big reasons why the PMI is so widely used among economists and financial analysts is its high degree of timeliness. First, purchasing managers who participate in data surveys, because of the nature of their jobs, have first access to real data on how their companies are performing that month. Second, ISM releases its index for the month on the first business day of the following month, generally at least two weeks ahead of the government's relevant economic data.
2. Accuracy.
The U.S. Department of Commerce conducted a study on the relationship between the PMI and manufacturing development trends and GDP, and the results show that: in general, when the PMI is greater than 50%, it predicts the development of the expansion of the manufacturing economy; and when it is less than 50%, it predicts a recession in the manufacturing economy. 50% point for the measure of whether the manufacturing sector is expanding or falling into a recession of the critical point. And when the PMI is consistently higher than 42.8% over a period of time, it signals the expansion of GDP; while when the PMI is consistently lower than 42.8% over a period of time, it signals the recession of GDP.
In addition, a comparison of the PMI with the Dow? Jones Index and the Standard & Poor's Index trend of the relationship between the study shows that in the absence of a clear threat of inflation period, the PMI and the Dow? Jones index trend consistency reached 80.9%, and the S&P index trend consistency reached 68.7%. PMI has such accuracy, the reason can be attributed to:
①Reasonable data sampling method. The survey sample, the Business Survey Committee, is carefully controlled by ISM to ensure that it represents the general structure of the manufacturing industry. Committee members are drawn from a variety of industries, with the ratio of the number of members between industries determined by the size of each industry's contribution to the GNP, and the industry categorization follows the U.S. Industry Classification Standards (ICS),*** which is divided into 20 industries. At the same time, the survey sample also attaches great importance to the dispersion of members participating in the survey in terms of regional distribution, to avoid the transitional concentration of members participating in the survey in the same region.
②The use of seasonal adjustment factor. Seasonal adjustment is designed to remove from the data the impact of repetitive events each year, such as weather changes, summer factory shutdowns and legal holidays and other similar factors, in order to correct the bias in the comparison of adjacent months, so that the PMI obtained more accurate and reliable. The seasonal adjustment factor is calculated and obtained by the U.S. Department of Commerce based on historical data and provided to ISM.
3. Simplicity.
Another reason for the popularity of the PMI is that it is easier for economists and financial analysts to identify economic trends using the PMI as opposed to official economic data that is often revised after release. The reason for this is that trivial distractions are filtered out of the PMI survey, allowing trends to emerge, while major companies participate in the data survey, making the data obtained highly representative.
Of course, PMI also has some flaws, such as the PMI for the diffusion coefficient, whose value is more than 50% just means that the number of managers who submitted positive reports in the survey is greater than the number of those who submitted negative reports. But the PMI has been widely recognized for its timeliness and excellent economic forecasting ability.
Calculation of the Purchasing Managers' Index
The PMI is a composite weighted index of five constantly changing indicators: new orders, production, supplier deliveries, inventories, and employment. The weighted indexes are somewhat representative, showing the trend and extent of change. This results in an upward, downward, or unchanged outcome for each firm in each dimension, and a diffusion index for each of the five dimensions by calculating the proportion of firms with different outcomes in each dimension. Diffusion index formula is as follows:
Diffusion index = percentage of increase - percentage of decrease + (unchanged percentage)
Then the five diffusion index in accordance with a certain weighting ratio after deducting seasonal and other factors affecting the Purchasing Managers' Index. Specific weighting ratios are as follows:
A. Product production weighting ratio of 25%
B. Orders weighting ratio of 30%
C. Inventory weighting ratio of 10%
D. Manufacturers' performance weighting ratio of 15%
E. Employment weighting ratio of 20%
Purchasing Managers' Index is expressed as a percentage, and is often expressed in terms of 50% is used as a cut-off point for economic strength: when the index is above 50%, it is interpreted as a signal of economic expansion. When the index is lower than 50%, especially when it is very close to 40%, there are worries of economic depression. Generally when it is between 40~~50, it indicates that the manufacturing sector is in recession, but the overall economy is still expanding.
China Purchasing Managers' Index
In late April 2005, China released the "China Purchasing Managers' Index" in Beijing and Hong Kong. This is the first time that this economic index has been released in China. The Purchasing Managers' Index is calculated based on a mathematical model through changes in basic data such as product prices and inventories. Based on the mathematical model calculation. In many developed countries, this index has been released for many years, using the monthly publication and review of the way to reflect the current economic situation. As China gradually become a global manufacturing power, global suppliers to China's procurement of finished products has become the need to focus on the link. 2004, China's total social logistics costs of 2.9 trillion yuan, accounting for 21.3% of GDP, more than double that of developed countries. If our country is only manufacturing without paying attention to the field of procurement and logistics, the huge profit margins in between will be squeezed out. The establishment of the "China Purchasing Managers' Index" fully demonstrates that China has been from the manufacturing sector "to get out of , began to focus on logistics and procurement issues.
China's purchasing managers index is by the National Bureau of Statistics and the China Federation of Logistics and Purchasing *** with the completion of cooperation, is a fast and timely reflection of the market dynamics of the leading indicators, which includes manufacturing and non-manufacturing industry purchasing managers index, and GDP together with the composition of China's macro-economic indicator system. At present, the purchasing managers' index survey has been included in the official survey system of the National Bureau of Statistics. Starting from June 2005, the PMI will be released on a monthly basis, and in accordance with the international practice, authoritative figures in the industry will be invited to conduct a macro-analysis of the PMI survey data, so that the results of the analysis will be more forward-looking and authoritative.
China's manufacturing Purchasing Managers' Index system*** includes 11 indices: new orders, production, employment, supplier distribution, inventories, new export orders, purchasing, finished goods inventories, purchase prices, imports, and backlog of orders. The Manufacturing Purchasing Managers' Index (PMI) is a composite index with a globally harmonized calculation methodology. If the manufacturing PMI is above 50%, it reflects a general expansion of the manufacturing economy; below 50%, it usually reflects a general recession of the manufacturing economy.
The construction history of China's Purchasing Managers' Index (PMI)
China's Purchasing Managers' Index (PMI) has been prepared and constructed for more than three years, and it can be roughly divided into three phases:
The first phase, the first half of the year 2002-2004, is the research phase, which focuses on the many exchanges and seminars with foreign experts, and carry out a lot of research and publicity work. At the same time, the National Bureau of Statistics is also very concerned about the establishment of the Purchasing Managers' Index, and the Enterprise Survey Team has set up a special topic and commissioned the Tianjin, Shandong and Ningxia Enterprise Survey Teams to carry out research.
The second stage is from the second half of 2004 to the end of 2004, for the promotion of China's manufacturing PMI stage, completed the preliminary preparatory work, including: the establishment of the China Federation of Logistics and Purchasing and the National Bureau of Statistics Enterprise Survey Team of the mode of cooperation; completed the development of the survey program, the design of the enterprise questionnaire, the development of the enterprise sampling methodology and implementation; in Shandong, Tianjin and Ningxia, three provinces (cities) to carry out some of the enterprise survey. provinces (cities) to carry out the pilot work of some enterprises; in Qingdao held a small seminar on purchasing managers' index in some provinces and cities; held a working conference on the national manufacturing purchasing managers' index, deployed the survey in January 2005, and carried out training on the characteristics of the purchasing managers' index and its application, the questionnaire of the purchasing managers, and the specific matters of the network reporting.
The third stage started from January 2005, when the national manufacturing purchasing managers' index survey was officially launched. After half a year's operation, three achievements have been made: First, a stable survey channel has been established, and the purchasing managers of 727 enterprises in 20 major industries in the national manufacturing industry have filled in the questionnaire on a monthly basis. Secondly, a manufacturing PMI database was established. Purchasing managers filled in the online report every month, and after data verification and summarization, a rich and complete PMI database of China's manufacturing industry was established. Thirdly, based on the survey results, China Federation of Logistics and Purchasing and the Enterprise Survey Team of the National Bureau of Statistics compiled the Manufacturing Purchasing Managers' Index and wrote the business report. There are now six months of indices. In April 2005, we held an expert validation meeting, and experts from relevant state ministries and research institutes spoke highly of it.
Significance of China's Purchasing Managers' Index
China's Purchasing Managers' Index (PMI) is an internationally recognized macroeconomic monitoring system, covering the fields of production and distribution, manufacturing and non-manufacturing industries, which plays an important role in monitoring and forecasting the country's economic activities. The significance of establishing the China Purchasing Managers' Index lies in:
1. It is conducive to international convergence. At present, there are 22 countries such as the United States, Britain, Singapore and other countries have developed PMI index. After China's accession to the WTO, is increasingly becoming the world's purchasing center and manufacturing center, China's economic development has become the main driving force of the world's economic development, China's economic situation has been the focus of global attention, so it is China's need for PMI, the world also needs China's PMI. the establishment of China's PMI, will be in two aspects of convergence with the international community: one is the methodology of the survey and statistical methodology of convergence; the second is data comparability.
2, conducive to the national economy and industrial economic macro-control and forecasting. PMI is a fast and timely leading indicator of economic activity, especially in developed countries. Through PMI, we can monitor and predict the problems and trends in economic and commercial activities in time, so that the government's direction of the macro-economy is based on a scientific foundation.
3, is conducive to guiding the enterprise's purchasing, production, operation and other activities. PMI survey involves enterprise production, purchasing, inventory, sales, prices and other links, reflecting the enterprise's overall business activities, PMI and PMI-based business reports on the actual business activities of the enterprise has a strong role in guiding the enterprise, so that the enterprise, especially the large enterprise group's strategic decision-making and business adjustments have a reliable basis. reliable basis for strategic decision-making and business adjustment, especially for large enterprise groups.
China Manufacturing Purchasing Managers' Index (PMI)
July 6, 2005 The China Manufacturing Purchasing Managers' Index (PMI) was officially released on July 6, 2005 after nearly three years of preparation and trial work. The PMI for China's manufacturing industry is compiled by the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing (CFLP)*** in cooperation. According to the division of labor agreed upon by both parties, the General Enterprise Survey Team of NBS is responsible for data collection and processing; China Federation of Logistics and Purchasing and China Logistics Information Center are responsible for data analysis, business report writing and social release. At present, the Purchasing Manager Index (PMI) survey has been included in the official survey system of the National Bureau of Statistics (NBS). Purchasing Manager's Index (PMI) is an internationally recognized macroeconomic monitoring index system, which plays an important role in monitoring and forecasting national economic activities. At present, 22 countries and regions, such as the United States, the United Kingdom, Japan and Singapore, have formulated PMI indexes. The establishment of China's purchasing manager index is of great significance, which is not only conducive to the macroeconomic regulation and forecasting of the national economy and industrial economy, but also helpful in guiding the enterprises' purchasing, production, operation and other activities. The compilation of China's manufacturing purchasing manager index system is a pioneering work and a systematic project. In terms of the index survey and compilation method, it not only follows the international common practice, but also takes into account China's specific national conditions; in terms of the survey method and the determination of samples, it adopts PPS (i.e., unequal probability sampling proportional to the size of the enterprise) stratified sampling method in accordance with the contribution of the major categories of the industrial sector to the manufacturing industry's value-added to determine the sample of 727 enterprises, which ensures the representativeness of the survey units; in terms of the survey and collection of data, it adopts the National Statistics Bureau's Purchasing Manager Indicator System. In terms of investigation and collection of data, through the survey channels of the National Bureau of Statistics survey system and professional statistical survey team, to ensure the reliability and timeliness of the data source; in terms of data analysis, the China Federation of Logistics and Purchasing and the China Logistics Information Center have a group of industry experts to carry out in-depth research on this issue, and the National Bureau of Statistics Enterprise Survey Team to carry out thematic analyses. And according to the international practice, invited the industry authority combined with PMI survey data for macro-analysis, so that the results of the analysis is more forward-looking and authoritative. This work has also received strong support from Hong Kong Li & Fung Group. Starting from June 2005, China Federation of Logistics and Purchasing and the National Bureau of Statistics will release the Manufacturing Purchasing Managers' Index on a monthly basis, which is released on the first working day of each month. The China Manufacturing Purchasing Managers' Index System*** consists of eleven indices: New Orders, Production, Employment, Supplier Distribution, Inventories, New Export Orders, Purchasing, Finished Goods Inventories, Purchase Prices, Imports, and Backlog of Orders. The results of the survey are expressed in percentage terms. The calculation process is as follows: First, based on the responses of corporate purchasing managers to each survey question (this month compared to the previous month), the percentage of purchasing managers who answered "up", "flat", or "down" is calculated separately. The proportion of purchasing managers who answered "rising", "flat" or "falling"; then, the proportion of "rising" is assigned to 1, the proportion of "flat" is assigned to 0.5, and the proportion of "falling" is assigned to 0, to summarize the results. The proportion of "flat" is assigned to 0.5 and the proportion of "down" is assigned to 0, which is summarized to get the diffusion index of each issue. The Purchasing Managers' Index (PMI) for the manufacturing sector is a composite index with a globally harmonized calculation methodology, weighted by five diffusion indices. These five indices are based on the degree of their prior influence on the economy, the weights of the indexes are: 30% of new orders, 25% of production, 20% of employment, 15% of suppliers' distribution, 10% of inventories. The diffusion index has the characteristics of a prior index, reflecting the trend and magnitude of changes in all levels of economic activity. A manufacturing PMI index above 50% reflects an overall expansion of the manufacturing economy; below 50% usually reflects an overall recession of the manufacturing economy. The Purchasing Manager's Index (PMI) for China's manufacturing industry in June 2005, as communicated by this conference, shows that the PMI index is 51.7%, indicating that China's manufacturing economy is still in the stage of growth. It should be noted that since March 2005, the PMI index has been declining for three consecutive months, from 57.9% to 51.7%, and although it is still above 50%, it is close to the 50% threshold, which may indicate that the growth of the manufacturing economy has begun to shift from an upward trend to a high and stable level, with the possibility of a slight decline. The main indices that make up the PMI have all declined to varying degrees. New orders, production, export orders, inventories, purchases, purchase prices, supplier delivery time and other important indicators are at their lowest point this year. In the 20 industries surveyed, eight industries PMI are below 50%. They are petroleum processing and nuclear fuel processing industry, chemical raw materials and chemical products manufacturing, pharmaceutical manufacturing, ferrous metal smelting and rolling processing industry, metal products industry, special equipment and instrumentation manufacturing, tobacco manufacturing, non-metallic mineral products industry. From the type of enterprise point of view, state-owned enterprises PMI for 47%, showing that the impact of the larger, the economy produced signs of decline. From a regional point of view, east, central and western regions PMI index were 51.6%, 52.7% and 52.9%, the highest in the western region, indicating that the country's policy of tilting to the central and western regions has been revealed. And the eastern part of the economic growth is obviously slower than the central and western parts of the country, showing signs of falling back deserves special attention.
China Manufacturing Purchasing Managers' Index PMI Release Time
Beginning in June 2005, the China Federation of Logistics and Purchasing and the National Bureau of Statistics will release the Manufacturing Purchasing Managers' Index (PMI) on a monthly basis on the first working day of each month.