Earlier today, an official report showed that China’s purchasing managers’ index came in at 50.1 for the month of May. A reading of above 50 shows expansion. However, this was the only bit of good news.
The official non-manufacturing purchasing managers’ index, which measures activity in the services sector, showed a reading 53.1 for the month of May. While the services industry expanded, it slowed down. The reading for the month of April was 53.5. In fact, May is the second straight month of deceleration.
Meanwhile, the Caixin-Markit manufacturing purchasing managers’ index, which was also released today, showed a reading of 49.2 for the month of May.
The latest data once again highlights the weakening Chinese economy. Indeed, the weakness in the Chinese economy is also having an impact on equities. Year-to-date, the BMO China Equity Index ETF (TSX: ZCH) has fallen more than 13%. Given the weakening economy, the ETF could see further losses.
In the last year, ZCH has fallen more than 16%. Its performance in the last five years has also been not impressive, highlighting the ongoing concerns over the slowdown in the Chinese economy.
