Markit issued its PMI data for China in June. The numbers were awful, and another indication that the economy in the People’s Republic is in great trouble. Modest stimulus packages and other actions by the central government have not helped. As a matter of fact, an effort to bring down availability of credit may have been harmful.

According to Markit:

PMI hits nine-month low in June as output and new orders both fall
Key points

• Flash China Manufacturing PMI™ at 48.3 (49.2 in May). Nine-month low.
• Flash China Manufacturing Output Index at 48.8 (50.7 in May). Eight-month low.

Additionally:

Commenting on the Flash China Manufacturing PMI survey, Hongbin Qu, Chief Economist, China & CoHead of Asian Economic Research at HSBC said: “The HSBC China Flash Manufacturing PMI dropped to a nine-month low of 48.3 in June, following on the sequential reduction in both production and demand. Manufacturing sectors are weighed down by deteriorating external demand, moderating domestic demand and rising destocking pressures. Beijing prefers to use reforms rather than stimulus to sustain growth. While reforms can boost long-term growth prospects, they will have a limited impact in the short term. As such we expect slightly weaker growth in 2Q.”

Because China is the world’s second largest economy and the “factory to the world,” the data show that trade partners, particularly Europe, have had accelerating economic problems. Major exporters to China, which include the United States, also will find the volume of exports to the huge Asian nation falling.

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