Chinese negative data let tremble the world’s stock exchanges
China’s manufacturing sector has lost its glory in May and the preliminary HSBC China Manufacturing Purchasing Managers’ Index fell to 49.6 points in May, in April the final reading was 50.4 points. A figure below 50 is signalling a contraction whereas above 50 it indicates growth
Another meter is the use of electricity and it reflects the real economy, it was only up 3.8 % on an annual basis for the first four months of 2013. Also China’s official PMI Purchase Manager Index fell to 50.6 points in April.
Another fact is to be considered. Japan has taken action to devalue its currency, after the government change and is eager to replace China in exports. On the other hand there are close ties of Japan to China in view to exports, so it is a two-sided sword.
Also the labour market in China shows a weakness, for example the leading recruitment website Zhaopin.com – so reports the Wall Street Journal – fell sharply (22 %). The first quarter is the peak hiring season in China, it is the steepest decline since Zhaopin started in 2010 to collect relevant data. Chinese manufacturers have been trimming their workforce for the second month. As we all know, there are demographic shifts and China’s workforce is aging and shrinking, but low unemployment rates and rising wages are the basis of social stability. Strong employment is also a crucial precondition for rebalancing the economy so that households become a bigger driver of growth. The National Bureau of Statistics showed that this process is not off ground with private consumption’s share of gross domestic product settled at 35.7 % in 2012. We would like to add that also the growth of fiscal revenue is slowing.