China: PMI and industrial production ease in June
July 1, 2012
The Purchasing Managers Index (PMI) published by the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing (CFLP) fell from 50.4 points in May to 50.2 points in June. The deterioration, however, overshot market expectations, which had the PMI declining further to 49.9 points. The reading represents the second consecutive monthly drop in the index and, at the current level, the PMI is now sitting at its lowest point since November 2011. The June deterioration was broad-based, as three out of the five categories that compose the index recorded losses over the previous month. In particular, the production output and the employment categories suffered the largest falls. The input prices category, which is a reliable leading indicator of consumer prices, continued to fall, while export orders, a gauge for future shipments of manufactures, lost 2.9 points and dived below the 50-point threshold that separates expansion from contraction. Meanwhile, industrial production added 9.5% in June over the same month last year, slightly down from the 9.6% increase observed in May. Moreover, the print undershot market expectations that had industrial output increasing 9.8%. Owing to the weaker reading, the trend continues to point downwards, with annual average growth in industrial production slowing from 12.4% in May to 11.9% in June.