China PMI Numbers

Pinnacle Digest writes: J.P. Morgan's Global PMI for May came in lower at 50.6. This is just above the level indicating expansion—and China’s HSBC Manufacturing PMI fell to 48.4. Frank Holmes explains in his most recent article that Chinese PMI tends to reflect export demand. Lower PMI indicates lower exports. This is not reflective of a rising USD of late which leads us to believe that China is truly cooling now.

Europe is deep in a recession and China is feeling the pain. Europe is China's largest export partner with roughly 22% of all exports heading to Europe. Only 17% of China's exports are now shipped to the US. This was not always the case as the US has been battling its own recessionary forces for years. All of this is impacting China's GDP which has been cooling in recent months.

Our team at Pinnacle has warned of this for years. If China's middle class is unable to fill the void from Europe and the US, a significant decline or short term collapse may threaten China. Frank argues that China clearly has the upper hand in controlling its growth and is becoming more independent year after year. Frank evaluates the back bone of China's economy and why he believes policy will continue to support robust economic growth. The next government policy cycle in China looms and Holmes is confident in China's leaders’ willingness to act.

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