Over the weekend, the Chinese government released the official non-manufacturing PMI which missed estimates, sending risk assets across Asia lower. The weak services PMI followed the weaker than expected manufacturing PMI last week, spooking investors that the global economic recovery could be in jeopardy as China slows.
The National Bureau of Statistics in China reported that the service sector expanded slower in February than in January with the services PMI reading 54.5 in February, below January's 56.2. The weak services PMI followed the weaker than expected manufacturing PMI last week, which came in at 50.1 for February from January's 50.4 reading.
The slowdown in the Chinese economy could be worrisome, or not. Recall that the Chinese markets and pretty much the entire economy shut down for the better part of a week in February in recognition of the lunar new year holiday. Around this time each year, output slows as people are taking vacation time. Each year, it is nearly impossible to gauge the true impact of these effects so soon after they happen.
Should economic indicators in China continue to slow in March, then it would be time to fret. However, for now, it is too hard to gauge exactly what is happening in China. Therefore, investors can and should focus on any of the numerous other global crises du jour.
BY Matthew Kanterman
The National Bureau of Statistics in China reported that the service sector expanded slower in February than in January with the services PMI reading 54.5 in February, below January's 56.2. The weak services PMI followed the weaker than expected manufacturing PMI last week, which came in at 50.1 for February from January's 50.4 reading.
The slowdown in the Chinese economy could be worrisome, or not. Recall that the Chinese markets and pretty much the entire economy shut down for the better part of a week in February in recognition of the lunar new year holiday. Around this time each year, output slows as people are taking vacation time. Each year, it is nearly impossible to gauge the true impact of these effects so soon after they happen.
Should economic indicators in China continue to slow in March, then it would be time to fret. However, for now, it is too hard to gauge exactly what is happening in China. Therefore, investors can and should focus on any of the numerous other global crises du jour.
BY Matthew Kanterman