China PMI Falters Again in June -- Are the Numbers Real?

Data from China’s National Bureau of Statistics and the China Federation of Logistics and Purchasing showed that June PMI was weak — another sign that troubled economies in Europe, and perhaps internal demand in the People’s Republic, have stumbled badly. If the primary cause is the recession in most EU nations, the figures will get worse.

The official PMI index for June was 50.2 compared to 50.4 in May.

The silver lining was that “Surveys by Reuters and Bloomberg News indicated that economists had expected the PMI to slip just below 50, into contraction,” according to MarketWatch.

The PMI figures may also have been manipulated higher than they actually were. More and more China observers and economists believe that data from the People’s Republic is flawed, either because the large provinces make up figures to please the central government, or the central government itself sets figures to show the nation has not started a sharp slide in GDP. Some experts believe that GDP expansion in China could be as slow as 7% in the third quarter — a near collapse compared to the tradition rate of 10%.

Douglas A. McIntyre