According to official statistics issued on 1 March, the business activity index (PMI) in the industrial sector of China in February of this year fell to 49 points, according to Reuters. In January the rate was 49.4 per item.
The last time the index of business activity in industrial sector of China fell to 49 points in November 2011, the Agency said. According to the Agency Bloomberg, below this level the industrial PMI of China fell only in 2009. Economists polled by Reuters had expected the index fall in February to only 49.3 points.
“This prolonged winter for Chinese economy”, — noted ekonomisti Bloomberg Intelligence’s Tom Orlik and Fielding Chen.
According to Reuters, the industrial sector of China is under pressure from weak demand domestically and abroad, and surplus production in key industries, making it unresponsive to supportive measures by the Central Bank of China, therefore, lower interest rates. New export orders and total orders continued to decline in February, according to Reuters.
In addition, some manufacturers are struggling with heavy debt burden that is harder and harder to repay because they have to constantly reduce prices to increase sales, notes Reuters.
The fact that the PMI is below 50 points indicates contraction in business activity, and if it goes above 50, is talking about her growth.
Earlier last week, 25 February, stocks in China fell more than 6%. The Shanghai stock exchange index Shanghai Composite following the results of session fell to 6,41%, falling to 2741,2 points, the Shenzhen Component index SZSE stock exchanges showed an even more serious decline, losing 7,41%, to 1738,6 item. YTD Shanghai Composite index lost 23%.
Analyst VTB 24 Stanislav Kleshchev in his review, quotes from which I quoted claimed that the publication of the February PMI can cause a new wave of concern at the state of China’s economy.
“The publication of the February PMI next week could spark a new wave of concerns about the current state of the Chinese economy and the passivity of the authorities on giving additional incentives. The resumption of aggressive selling in the stock market is not a good harbinger of that,” he predicted.