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Fast Comment ChinaStimulus has not stopped growth from slowing

  1. Both PMIs now in contractionary territory
  2. Stimulus-driven rebound proved short-lived
Both PMIs now in contractionary territory
The manufacturing PMI from Markit dropped much more than expected by consensus, to 49.4 in June, from 50.2 in May. The official manufacturing PMI was flat, at 49.4, contrary to consensus expectations of a small uptick. Both PMIs are now below the threshold between expansion and contraction.
Stimulus-driven rebound proved short-lived
The weak PMIs confirm that the stimulus-driven rebound earlier this year was short-lived and that growth is indeed still slowing as the fallout from the trade war kicks in. The trade truce between China and the US, agreed at the sidelines of the G20 meeting, removes some uncertainty, but it will not stop growth from falling unless a more lasting deal is agreed upon, in our view. Further economic stimulus will mitigate, but not completely counter, the impact of the trade war and the slowdown in structural growth.


Bjarke Roed-Frederiksen

Senior Economist

Latin America and China

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