China’s Flash PMI number was released and it was not a good one. Readings under 50 are considered to be in the contraction zone and the 48 was clearly a level for concern. Much of the recent tightening to tame the inflation monster is to blame, but the slowdown in European demand (one of China’s biggest trading partners) has to be having a serious affect as well.<\/p>\n
Of course reports on this has to come with the obligatory note that this reading provides for more ammunition for additional stimulus<\/a>. Yet, there has been no indication from China’s leaders that additional stimulus is going to coming anytime soon. In fact, Prime Minister Wen Jiabao has said many times that even as there slowing, inflation still remains his biggest concern.<\/p>\n China has been one of the key drivers of the global recovery and this is confirmation that even with their incredible horsepower, the many headwinds that are emanating from Europe are too much for them to pull the global economy on their own.<\/p>\n Watch Chinese related stocks over the next few days, the materials sector and industrials. All of which may show weakness related to this report.<\/p>\n