I did a double take on that result, back into contraction again after a good June. A huge miss on expectations.
This is its first contraction in 9 months and points to embedded trouble in the Chinese economy. This PMI has been outperforming the official PMI and offered a sliver of hope, but now both are in contraction.
Summary:
- Manufacturing output grew for the ninth consecutive month, but at a marginal rate.
- Total new orders declined, with consumer goods outperforming investment goods.
- Employment remained steady despite a shrinking labour market.
- Input costs rose, but selling prices decreased due to competition.
The report concludes by saying that policy focus is needed on stabilizing growth and improving domestic demand. Well, yeah. But with the epic debt overhang in China it'll be slow going.
Official PMI from yesterday:
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China has two primary Purchasing Managers' Index (PMI) surveys - the official PMI released by the National Bureau of Statistics (NBS) and the Caixin China PMI published by the media company Caixin and research firm Markit / S&P Global.
- The official PMI survey covers large and state-owned companies, while the Caixin PMI survey covers small and medium-sized enterprises. As a result, the Caixin PMI is considered to be a more reliable indicator of the performance of China's private sector.
- Another difference between the two surveys is their methodology. The Caixin PMI survey uses a broader sample of companies than the official survey.
