There may be a ray of light out of China which shows that parts of the global economy are solid. The PMI of the People’s Republic rose to 51 in February, a sign that manufacturing grew very, very modestly. The data showed that export activity was fairly good.
Export orders showed a bigger divergence, with the government’s new export orders sub-index rising to 51.1 in February, the first indication of expansion in four months and the highest reading since May 2011.
That could mean inventories among China’s trade partners are low, but it could also mean a pick-up in business and consumer demand. That is not likely to have occurred in recession-plagued Europe. However, US GDP has grown faster than expected and was up 3% in the last quarter. That improvement has caused many economists to revise their 2012 US growth forecast higher. China’s PMI over the next several months could be one of a number of indications of whether those forecasts are correct.
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