China: Flash PMI Down Sharply

August 24th, 2012
in econ_news, syndication

Econintersect:  The first of two PMI (Purchasing Manager Index) readings for August has been reported.  The HSBC (Hong Kong Shanghai Bank) Flash PMI breaking-news-130pxcame in at 47.8, down from a 49.3 reading for July.  This was the lowest reading in nine months and the tenth consecutive month below the 50 level which marks the boundary between expansion and contraction.

The flash PMI survey covers many medium sized and small private held companies which are not included in the official PMI, due next week.  The official PMI concentrates on large corporations and GSEs (government sponsored enterprises) and has been declining from healthy levels early in the year to just above the 50 level in July.

Follow up:

Since the flash index is slanted more toward export-oriented firms the low reading adds to the bad news for exports in the third quarter.  GEI News reported two weeks ago that exports for July showed an unexpectedly weak 1% growth year-over-year after a fairly strong amount of growth in the second quarter.  The first quarter showed almost no growth year-over-year for exports so the second quarter had been thought to represent the start of a turn around.  That expectation appears to be in the process of getting smashed - The flash PMI for August may portend an even weaker export report for the month than the very poor July number when it is released the second week of September.

From Shanghai Daily:

Qu Hongbin, chief economist for China at HSBC, said falling orders drove the August Flash PMI to a nine-month low.

"It suggests Chinese producers are still struggling with strong global headwinds," Qu said. "China must step up policy-easing to lift infrastructure investment in coming months if it hopes to achieve the stated policy goal of stabilizing growth and the job market."

China's gross domestic product expanded 7.6 percent from a year earlier in the second quarter, the slowest pace in three years, which drew closer to the government target of a minimum 7.5 percent growth for this year.

Zhang Zhiwei, a Nomura economist, said the Flash PMI suggested economic momentum likely remained weak in August. "It indicates that the batch of August economic data may face downside risks as well. Export weakness in July may have continued into August, and the effect of policy stimulus through infrastructure investment may not show up as strongly in the HSBC PMI as in the official PMI," Zhang said.

John Lounsbury


Make a Comment

Econintersect wants your comments, data and opinion on the articles posted. You can also comment using Facebook directly using he comment block below.

 navigate econintersect .com


Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day


Asia / Pacific
Middle East / Africa
USA Government

RSS Feeds / Social Media

Combined Econintersect Feed

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution



  Top Economics Site Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2018 Econintersect LLC - all rights reserved