The slide in Chinese manufacturing momentum continues

The slide in Chinese manufacturing momentum continues. The Chinese official purchasing managers index which measures the activity rate among manufacturers slipped again in February from 50.5 to 50.2 (the blue bars in the chart) leaving the manufacturing sector hovering on the cusp between expansion and contraction. The effect of otherwise favourable conditions for resource sector equity prices (the red line) are being eroded by the evident lack of strength coming from China and highlighting what remains the most significant risk facing the sector. While the Chinese government is rhetorically committed to keeping the overall growth rate above 7.2% with manufacturing expanding at a sufficiently high rate to meet its employment objectives, they are struggling with the implementation.