China Manufacturing Contracts In June According To The PMI

Manufacturing in China contracted - on a seasonally adjusted basis - for the first time in many years in July as export demand faltered and factories closed to clear the air before the Olympic Games. The Manufacturing Purchasing Managers' Index - prepared by the China Federation of Logistics and Purchasing - fell to a seasonally adjusted 48.4 in July from 52 in June. Any reading below 50 represents contratction, and this was the first such reading since the survey began in 2005.



The output index fell to 47.4 in July from 54.2 in June, while the index of new orders dropped to 46.2 from 52.6. The index of export orders declined to 46.7 from 50.2.

None of this is really too surprising, as it is hard to see how you can maintain 20% plus export growth as all your main customers' economies are slowing. The expansion in what is now the world's fourth-biggest economy slowed for the fourth straight quarter in the three months through June, according to initial estimates.