China: Both PMI Readings Indicate Contraction, Asian Stocks Decline

September 3rd, 2012
in econ_news, syndication

Econintersect:  The official PMI (Purchasing Managers Index) slumped below the 50 level that marks contraction for the first time in 11 months.  It breaking-news-130pxjoins the "other" PMI Index from the Hong Kong Shanghai Bank (the HSBC PMI) that has just come in with a final reading of 47.6 for August.  This index had a preliminary reading (GEI News) of 47.8 last week.  The official PMI, which covers surveys of large companies, including SOEs (state owned enterprises) has been above the contraction line for almost a year, while the HSBC survey, covering mid-sized and small companies, has been indicating a contraction for the past ten months.

Follow up:

The reading from the HSBC PMI is at the lowest level since March 2009, at the depth of the Great Recession.

China has been experiencing a collapse of inflation, with CPI (consumer price index) reported at 1.8% growth year-over-year in July, while PPI (producer price index) experienced its fifth month of deflation with a reading of -2.9% year-over-year.

Many are saying that the collapsing inflation numbers give the government lots of monetary options to stimulate the economy.

Asia/Pacific stocks were generally lower Monday morning after the lower PMI numbers were announced.  Oil prices declined as well, but golf continued its recent rally in early trading.

Sources:

 















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