The Flash PMI had already 'warned' of a contractionary print but the final May HSBC Manufacturing PMI is now the lowest in a year at 49.2. The last two months have seen this measure of the Chinese economy plunge at its fastest rate since March 2011. Of course the 'official' data still remains a handsome 50.8 (not contracting at all) but the underlying data of the HSBC/Markit index is just as awful with little in the silver-lining camp to save the day (or night). Employment dropped, new export orders and total orders fell, purchasing activity fell, with only a meager rise in output saving the index from a more precipitous decline. Output prices also plunged (but input prices dropped on the back of cheaper raw materials - particularly base metals) and inventories rose (in a lack of demand manner as opposed to 'if we build it' perspective according to HSBC). So, once again, just as in Q1 2012 (before the reality swoon) China is both expanding and contracting...
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