China Purchasing Managers' Index Drops to Seven Month Low

Bad news for China’s economy. The key purchasing managers’ index, or PMI, dropped to a seven month low of 50.2 in June, according to the National Bureau of Statistics. It hasn’t been this low since November 2011. With exports down, one analyst predicts that Beijing will relax monetary policies, perhaps this month.

 

Reuters quoted government researcher Zhang Liqun as saying, “New orders and input prices are still falling, which shows there are still many factors affecting production. A recovery in industrial output would take some time.”

 

China’s economy could continue to decline in the third quarter, sidelining Beijing’s growth target of 7.5 percent for the year.

 

The lower PMI also implies that foreign demand for Chinese products is down.

 

Reuters reports that Trade Minister Chen Deming believes China will be, “lucky” to hit a growth of imports and exports of 10 percent for the year.