Wednesday, April 4, 2012

China Manufacturing Contracts to 4-Month Low: "Further slowdown of growth momentum"

China Manufacturing PMI The HSBC China Manufacturing Purchasing Managers' Index, compiled by Markit, was a surprising -1.3 to a 4-month low of 48.3 in March, wiping out the prior 2 months of gains. This reading is above the 32-month low of 47.7 in November, but still indicates an ongoing slight contraction. Another PMI, by the Chinese Federation of Logistics and Purchasing, was +2.1 to 53.1 in March, indicating rather robust manufacturing expansion. This contradicts the HSBC China PMI. What to make of this? The two contrasting PMI's taken together indicate near equilibrium, or stagnation, for China manufacturing.

China Manufacturing PMI by Month Manufacturing began contracting, an Index reading of less than 50, in July 2011. The chart peaks were 55.7 in March 2010 and 55.3 in November 2010. The short, intermediate, and long-term trends have been downwards. An index reading above 50 indicates an overall increase in manufacturing. The PMI is a percentage - not a total.

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