Reports continue to indicate that China’s manufacturing sector is continuing to slow down. HSBC, which publishes a monthly purchasing managers’ index, said China’s PMI was on track to fall to 48.1 in June, down from 48.4 in May.The magic number for the PMI is 50; any number below suggests a contraction. If HSBC’s initial report is correct it would represent a seven-month low for China’s PMI. The Financial Times has more:
Virtually every component of the PMI survey, from manufacturing output to stocks of finished goods, pointed in a negative direction. But the declines were nowhere near as severe as late 2008 when the global financial crisis erupted.Qu Hongbin, HSBC chief economist for China, said: “With external headwinds remaining strong, exports are likely to decelerate in the coming months. The sharp fall of prices and moderation of new orders suggest weak domestic demand, posing destocking pressures for Chinese manufacturers.
Earlier this month China’s central bank cut interest rates for the first time in four years. And while the government has repeatedly ruled out introducing another large 2008-style stimulus, the easing of monetary policy in conjunction with the fast-tracking of several new infrastructure projects signals its increasing concern with the health of the Chinese economy.Europe, China, America, Japan, India: none of the world’s big economies have much good to report these days. It’s not a good time for political incumbents.