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Economy in Brief

China's PMI Erodes; China's Industrial Activity Barely Has a Pulse
by Robert Brusca  August 2, 2021

China's manufacturing PMI fell to 50.4 in July from 50.9 in June. It has been hugging the 50-51 range in terms of its averages for the past year. The manufacturing PMI has weakened sequentially although very little from 12-months to six-months to three-months.

New orders and output also have continued to ease sequentially along with the purchase of inputs, stocks, and new export orders.

In terms of monthly values in July of the 12 indexes along with the headline, seven of them have diffusion values below 50. Only two components have value of 51 or higher; output has a diffusion value of 51. Input prices have a diffusion value of 62.9.

Seven components and the headline all weakened month-to-month.

The percentile standings of China's manufacturing PMI report are uniformly weak. Only four of the PMI metrics stand above their historic medians input prices, stock levels, employment and order backlogs.

The weakest PMI standing is for production at 7.9 percent. Delivery lags are at a nearly as weak at a 9.4 percentile standing. These two weak standings tell us the production is extremely weak and with industry activity so weak that order delivery speeds are fast. New orders are weak too at a 30.9 percentile standing while order back logs are near normal at a 50.8 percentile standing.

China shows weak export orders that have an 18.8 percentile standing. Imports have a 44.5 percentile standing. China has weak export and import metrics.

Early reporting Asian economies show mixed PMIs in July. China, Indonesia, Myanmar and the Philippines weakened month-to-month in July. Malaysia and Japan improved month-to-month.

Japan has the highest ranking percentile standing of the group at an 80th percentile standing. Indonesia, Malaysia and Myanmar are extremely weak residing in their lowest 12th percentile or lower. China and the Philippines have a lower 30th percentile standing.

Over three months four averages are weakening: China, Indonesia, Malaysia, and the Philippines. All countries are stronger over 12-months average compared to 12-months previously. China and Malaysia were both weaker over six months and three months.

Asia continues to have uneven results. Its PMI indexes are mostly weak and momentum is mixed with more weakness than strength.

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