Factory activity drops in China – report

The manufacturing purchasing managers' index (PMI), a key measure of factory activity in China, has largely under-performed for much of this year [Xinhua]

The manufacturing purchasing managers’ index (PMI), a key measure of factory activity in China, has largely under-performed for much of this year [Xinhua]

There was more disappointing economic news from China today when Caixin Media/Markit reported that the general manufacturing PMI fell below analyst expectations in June.

The flash manufacturing purchasing managers’ index (PMI), a key measure of factory activity in China, posted at 48.2, below the 49.7 level anticipated by most experts.

While the PMI was 50.2 in May, up from 48.9 in April, Friday’s data indicates that the index is at its lowest level in 15 months.

A reading above 50 indicates expansion, while a reading below 50 represents contraction. The PMI factors in new manufacturing orders, the level of inventory, manufacturing production, supply and the employment health in the sector.

The PMI data was previously published by HSBC in sponsorship of Markit, a financial information services provider.

However, on June 30, 2015, Caixin Media Co., Ltd. agreed to sponsor Markit’s PMI data. This is its first flash publication.

In May, an HSBC report indicated that domestic demand was on the wane in China – and India – and could prompt central banks to cut interest rates.

But China’s service sector appears to be expanding.

The HSBC/Markit services purchasing managers’ index (PMI) posted at 53.5 in May, up from 52.9 in April, registering the quickest expansion in eight months.

The BRICS Post with inputs from Agencies

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