Much has been said about the slowdown in manufacturing in China which has caused stock markets in China to slump as well as fan worries about a worsening global economic picture. A structural slowdown has certainly taken hold, but most analyses have only focused on slowdowns in manufacturing and fixed asset activity, both based on yesterday’s news. The Chinese leaders preemptively announced policies months ago that would halt frothy real estate bubbles. Slowing manufacturing mostly reflects the slowing exports to slowing US and European economies. However, many China analysts ignore the services PMI which is more reflective of the health of the domestic Chinese economy, and that indicator has shown nothing but consistent continued expansion. Service PMI in August was 56.3, and July was over 55.
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