In a sign that the second largest economy in the world has not yet bottomed out, the manufacturing activity in China grew in June at the slowest rate since November of last year. The Purchasing Managers Index the official manufacturing control, dropped to 50.2 for June from 50.4 during May. A PMI of over 50 indicates an increase of manufacturing, while one below 50 indicates a shrinkage.
The figure in June exceeded the expectations of the market, but economists look at the reading as not promising, as indexes for new orders, imports and exports all paint to a gloomy picture. The sub index for new orders dropped to 49.2 in June from a reading of 49.8 during May. New export orders declined to 47.5 from a growing figure of 50.4 during May. The import sub index for June was down to 46.5 a drop of 1.6 points since May.
Economists are pessimistic about the situation of exports for the second six months of 2012, as the eurozone recession steps up. Most feel that neither imports nor exports will grow by more than 10% individually in 2012. The Commerce Minister said in June that China could achieve a growth of close to 10% in trade for 2012, but that includes imports and exports together.
In May, exports were 15.3% up from the same time last year a sharp increase from the 4.9% in April and easily beating a 6.9% growth estimate set by economists. However, those same economists warned against putting too much emphasis into the surprising figures. Many believe the Chinese government will look to increase its economy by lowering the benchmark interest rates once or twice during the third quarter of the year.
