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China PMI Collapses To 78 Month Low

The Caixin Flash China PMI for September fell to 47 compared to 47.3 in August The number is the lowest it has been in 78 months.

Commenting on the Flash China General Manufacturing PMI™data, Dr. He Fan, Chief Economist at Caixin Insight Group
“The Caixin Flash China General Manufacturing PMI for
September is 47.0, down from 47.3 in August. The decline
indicates the nation’s manufacturing industry has reached a
crucial stage in the structural transformation process. Overall,
the fundamentals are good. The principle reason for the
weakening of manufacturing is tied to previous changes in
factors related to external demand and prices. Fiscal
expenditures surged in August, pointing to stronger
government efforts on the fiscal policy front. Patience may be
needed for policies designed to promote stabilization to
demonstrate their effectiveness.”

A figure below 50 signals contraction in the manufacturing sector. There has been concern for nearly a year that China’s GDP growth has dropped well below the government’s target of 7%. The, among other things, has caused wild swings in China’s stock markets. It has also driving concern that the entire global economy has slowed. China is the second largest nation in the world based on GDP, trailing the U.S.

By Douglas A. McIntyre