China Manufacturing PMI Plummets to 6-Year Low

August 21st, 2015
in News, econ_news, syndication

breaking-news-130px7Econintersect: China's manufacturing sector reported the lowest PMI (Purchasing Managers' Index) reading in 6 years with an August 2015 Caixin/Markit "Flash" (preliminary) survey result of 47.1. Readings below 50 reflect a contracting manufacturing sector. The low value for the survey result was a surprise. This was down from a July reading of 47.8 June reading of 49.4 and was the sixth consecutive reading below 50. Analysts surveyed by Bloomberg indicated expectations were for a reading of 49.7.

Follow up:

Chinese companies cut their workforce numbers again in August, and at a faster rate than in July.  Every metric was weaker than in previous months except for work backlogs which were increasing, implying that employment reduction may slow unless demand for output falls even more.   The entrenched disinflation and deflation in Chinese manufacturing was reflected by continuing declines in both input prices and output charges.

Bloomberg says that the data has "fueled concern an economic slowdown is worsening".

china.pmi.flash.charts1.2015.july

 

But not all comments were negative.  Dr. He Fan, Chief Economist at Caixin Insight Group issued the following comments:

"The Caixin Flash China General Manufacturing PMI for August has fallen further from July's two-year low, indicating that the economy is still in the process of bottoming out. But overall, the likelihood of a systemic risk remains under control and the structure of the economy is still improving. There is still pressure on the front of maintaining growth rates, and to realize the goal set for this year the government needs to fine tune fiscal and monetary policies to ensure macroeconomic stability and speed up the structural reform. This will lead the market to confidence and renew the vigour of the economy."

Note: The Caixin Market PMI surveys were previously call the HSBC Markit PMI Surveys. These monthly surveys cover 420 privately owned manufacturing companies in China. The official government Manufacturing PMI surveys cover large companies, many of which are government owned enterprises.

Sources:









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