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Economy

China PMI Collapse, as German PMI Surges

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By Douglas A. McIntyre Updated Published
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China’s fresh purchasing managers index (PMI) data showed its economy has moved toward a state of stagnation, and manufacturing has moved into reverse. In the meantime, the PMI number for Germany moved sharply in the right direction.

For July, the HSBC figure for the People’s Republic was, according to Markit:

Flash China Manufacturing PMI at 47.7 (48.2 in June ). Eleven-month low.

Flash China Manufacturing Output Index at 48.2 (48.6 in June). Nine-month low.

In Germany, on the other hand according to Market:

Flash Germany Composite Output Index at 52.8 (50.4 in June),5-month high.

Flash Germany Services Activity Index at 52.5 (50.4 in June), 5-month high.

Flash Germany Manufacturing PMI at 50.3 (48.6 in June), 5-month high.

Flash Germany Manufacturing Output Index at 53.4 (50.5 in June), 17-month high.

With 50 as the line of demarcation, China essentially has reached the point of recession, while Germany has broken into unexpected expansion. Whether Germany’s place as a trading partner, primarily with the European Union, can continue to recover will depend on whether the recession in the region has begun to come to an end.

In China, on the other hand, the number is another confirmation that gross domestic product (GDP) has dropped below 7%, the level at which the central government will intervene. Ironically, Germany and China are huge trading partners, so eventually, the fate of the one will effect the other.

The net news is bad for the United States because its exports to China are much larger than those to Germany. The conclusion may be indirect, but America cannot continue expansion if China has started to take a huge dip.

Photo of Douglas A. McIntyre
About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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