China's manufacturing purchasing managers index released over the weekend highlights an improbable divergence between a manufacturing sector battling to expand...

John Robertson

PortfolioDirect

China's manufacturing purchasing managers index released over the weekend highlights an improbable divergence between a manufacturing sector battling to expand and record setting imports of iron ore and other raw materials during 2013. The official purchasing managers index for the manufacturing sector dropped from 51.0 to 50.5 in January. This was not a big drop but can influence sentiment about the resources sector (as well as global market conditions). Hence the inability of Australia's chief resource sector market indicator to build any meaningful momentum for the past two years (see the chart at (VIEW LINK). Worryingly, in hovering around the boundary between expansion and contraction, the index also highlights how much the resources industry is relying on artificially inflated investment spending for growth rather than demand from the makers of goods.


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John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...

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