China’s purchasing manufactures index contracted in July for the first time since mid-2010 when the recession was hardly over. HSBC, which publishes in index, reported that a reading of 48.9 in July from 50.1 in June. The dip is small and the data may move back up in August. But, it could just as easily fall further.

The concerns continue to grow that demand for China’s exports has weakened in the last quarter as US economic growth has flat lined and the turmoil in Europe has grown. Matters in America could get worse. Lay-offs have begun to rise. The effects of the Obama stimulus are gone. The Federal Reserve has ended its QE2 program.

The government of the People’s Republic still forecasts that GDP growth in the country will be over 9%. The PMI data makes that a little less like.

Douglas A. McIntyre