Markit issued its Purchasing Managers Index data for China in June. The numbers were awful, and another indication that the economy in the People’s Republic is in great trouble. Modest stimulus packages and other actions by the central government have not helped. As a matter of fact, an effort to bring down availability of credit may have been harmful.
According to Markit, the PMI hit a nine-month low in June of 48.3 (down from 49.2 in May) as output and new orders both fell. Moreover, the Flash China Manufacturing Output Index came in at an eight-month low of 48.8 (50.7 in May).
Said one expert, "Beijing prefers to use reforms rather than stimulus to sustain growth. While reforms can boost long-term growth prospects, they will have a limited impact in the short term. As such we expect slightly weaker growth in 2Q."
Because China is the world’s second largest economy and the "factory to the world," the data show that trade partners, particularly Europe, have had accelerating economic problems. Major exporters to China, which include the United States, also will find the volume of exports to the huge Asian nation falling.
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