Weak Caixin PMI Revives China Slowdown Fears

The Caixin Purchasing Managers’ Index (PMI) came in weaker than expected, spurring fresh fears over China’s economic growth and sending markets around the region lower.

The manufacturing PMI fell to 48.2 in December, from 48.6 in November, contracting for a tenth month and coming in below a Reuters poll forecast for 49.0. Levels below 50 indicate contraction. The Caixin PMI is a closely-watched gauge of nationwide manufacturing activity, which focuses on smaller and medium-sized companies, filling a niche that isn’t covered by the official data.

“Data suggested that client demand was weak both at home and abroad, with new export business falling for the first time in three months in December,” Markit, which compiles the survey, said in a release. “As a result, manufacturers continued to trim their staff numbers and reduce their purchasing activity in line with lower production requirements.”

Markets around the region certainly weren’t cheering. The Shanghai Composite was down as much as 4.1 percent after the data’s release, while Australian shares erased early gains, with the S&P/ASX 200 index off as much as 0.4 percent. The Australian dollar dropped from around 72.86 U.S. cents before the reading on one of its largest trading partners to as low as 72.05 U.S. cents.


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Craig Erlam

Craig Erlam

Former Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary.

His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News.

Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.