As The Manufacturing PMI Is Set To Fall Below 50…21 July, 2011, 18:25. Posted by Zarathustra
Tags: Economy, Oil, PMI
As the HSBC flash estimate for China’s manufacturing PMI falls below 40, indicating a contraction of manufacturing activities, people might start to wonder again whether there will be a hard landing. The first half economic data was robust, with GDP growing at 9.5% over a year ago while inflation hit a new high at 6.4%, indicating that policy makers will have more room to tighten monetary policy.
Today’s PMI flash estimate, however, suggests that things do not look as good as the earlier data suggested.
The chart below shows the official PMI (instead of the HSBC PMI). As you can see, the headline figure has been falling for some months now, while inventory is climbing. Hardly a good sign.
Source: China Federation of Logistics & Purchasing
Incidentally, PMI fell below 50 in July and August 2008, rebounded briefly in September, then fell off the cliff.
In case anyone is interested, this was how oil prices have been behaving: