The advance release of the Chinese purchasing manager’s index (PMI) dissapointed last month as it dipped into a 11 month low with a reading of 49.2. The factory sector is struggling to gain traction and get back above 50 which would signal expansion. Economists were expecting it be in the 50.6-8 range. The Chinese government has pushed a new normal for growth expectations from what is seen as a pre-emptive move ahead of missing the 7 percent growth target for 2015.
A below forecast flash PMI of 49.4 would put further pressure on the People’s Bank of China to launch further stimulus measures to avoid the economy slowing down even further. Further rate cuts are expected along with lower reserve requirement ratios for Chinese financial institutions.
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