Purchasing Managers See Slowdown In Economic Activity In 2Q-11 In China And Euro Area

Markit Economics released, today, the flash estimates derived from their May surveys of purchasing managers in China, France, Germany and the Euros Area, as a whole.  Data for China are available only for the manufacturing sector while data on the service sector and a Composite--manufacturing and service index--as well as the data on the manufacturing sector are available in the other areas. The results are shown as the balance of opinion between those believe the economy is increasing and those who believe it is declining. The 50% level marks the difference between expansion and contraction. The data for the manufacturing sector released today, are all still in the expansion phase, but there has been a definite weakening since earlier this year, as can be seen in the first chart.

While the index for the manufacturing sector in China showed the smallest decline of the three countries and the Euro Area as a whole--67 basis points--from 51.76% in April to 51.09% in May, the index is the closest to the 50% mark . At 51.09%, it compares with 58.18% for German, 54.99% for France and 54.86% for the whole Euro Area.

Even thought the French purchasing managers were more negative in May than the were in April, they were more optimistic about the service sector than they were about the manufacturing sector. The percent balance for the service sector declined by 64 basis points from 63.44% in April to 62.81% in May, compared with the decline of 195 basis point in the manufacturing sector from 56.95% in April to 54.99% in May. The German purchasing managers were more negative than the French. The balance of opinion on the manufacturing sector fell 350 basis points from 61.68% in April to 58.18% in May and the balance on the service sector fell 278 basis points from 57.72% in April to 54.74% in May.

As a result of the declines in the percent balances of the German purchasing managers, the May composite index for Germany, at 56.36% is now significantly below that of France at 60.48%. The Composite indexes for Germany, France and the Euro Area as a whole are shown in the second chart.

Markit PMI Flash Estimates	May 11	April 11	Change
(Diffusion Indexes)
China
Manufacturing	51.09	51.76	-0.67
Euro Area
Composite	53.40	56.82	-1.43
Manufacturing	54.86	57.75	-2.90
Service	55.40	56.83	-1.41
Germany
Composite	56.36	59.86	-3.50
Manufacturing	58.18	61.68	-3.50
Service	54.75	57.72	-2.78
France
Composite	60.48	32.37	-1.89
Manufacturing	54.99	56.94	-1.95
Service	62.81	63.44	-0.64