China: PMI dips into negative territory in August and industrial production continues to slow
September 1, 2012
The Purchasing Managers Index (PMI) published by the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing (CFLP) edged down from 50.1 points in July to 49.2 points in August. The reading undershot market expectations, which had the PMI falling only to 50.0 points and marked the fourth consecutive monthly drop in the index. The PMI is now below the 50-point threshold that separates expansion from contraction in the manufacturing sector for the first time since November 2011. The August deterioration mainly reflected a decline in three out of the five categories that compose the index, with the production output category suffering the largest loss. Export orders remained unchanged at July's 46.6 points and the input prices category, which is a reliable leading indicator of consumer prices, recovered somewhat but remained below the 50-point threshold for the fourth month in a row. Meanwhile, industrial production increased 8.9% in August in annual terms, down from the 9.2% increase observed in July. The print undershot market expectations that had industrial output rising 9.0% and marked, in fact, the lowest growth rate recorded since May 2009. Owing to the weaker reading, the trend continues to point down, with annual average growth in industrial production slowing from 11.5% in July to 11.1%.