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China’s Industrial PMIs: No Improvement
- August’s Industrial PMIs provide no indication that China’s manufacturing sector is rebounding. There is, in fact, no evidence that the measures introduced since the second quarter of this year to boost economic activity have had a significant net effect on output.
- To be sure, the services PMI remains clearly in expansion range, and rather stable. But the goods-producing sectors of the economy are of critical importance for China, more so in relative terms than is normal for developing or developed economies, particularly given the size of China’s.
- Thus the data just released add to the pressure to ease policy further. It is a virtual certainty by now that the government will intensify its counter-cyclical stance, by accelerating public sector investments.