Financial Professionals


China PMI


During the last week of July, market expectations for the upcoming China PMI began to fall, somewhat dramatically.

On July 31, the PMI did in fact fall from 52.1 for June to 51.2 for July. Importantly, the Index remained above the contraction / expansion 50 line, as it has since March 2009. As with most of the economic numbers from China, there is a seasonal effect in the numbers. For the past five years, July has been a month of weakening for PMI. Historically, August has been a marginal gainer. Within this month's report, the employment, export, and new orders components rose from June levels.

The resource trade remains viable in the second half of 2010; clearly, China is a significant contributor to that theme. Keep in mind that China maintains more monetary policy flexibility than any G-3 economy. If the "slowdown" begins to look like a "meltdown," the Chinese Central Bank will quickly move toward easing.

CHINA PMI 1/31/05-7/31/10


Source: Bloomberg

Past performance is not a guarantee of future results.

Virtus Investment Partners provides this communication as a matter of general information. The opinions stated herein are those of the author and not necessarily the opinions of Virtus, its affiliates or its subadvisers. Portfolio managers at Virtus make investment decisions in accordance with specific client guidelines and restrictions. As a result, client accounts may differ in strategy and composition from the information presented herein. Any facts and statistics quoted are from sources believed to be reliable, but they may be incomplete or condensed and we do not guarantee their accuracy. This communication is not an offer or solicitation to purchase or sell any security, and it is not a research report. Individuals should consult with a qualified financial professional before making any investment decisions.