China: PMI falls to eight-month low in July while industrial production continues to slow
August 1, 2012
The Purchasing Managers Index (PMI) published by the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing (CFLP) inched down from 50.2 points in June to 50.1 points in July. The deterioration contrasted market expectations, which had the PMI edging up to 50.4 points and represented the third consecutive monthly drop in the index. At the current level, the PMI is now sitting at its lowest point since November 2011 and only a notch above the 50-point threshold that separates expansion from contraction in the manufacturing sector. The July deterioration was broad-based, as all categories except for raw material inventory recorded losses over the previous month. In addition, export orders retreated 0.9 points to 46.6 points and the input prices category, which is a reliable leading indicator of consumer prices, reached the lowest level since December 2008. Meanwhile, industrial production added 9.2% in July over the same month last year, down from the 9.5% increase observed in June. The print undershot market expectations that had industrial output rising 9.7% and marked, in fact, the slowest 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 11.9% in June to 11.5%.