New data suggest that the Chinese government will be able to use quantitative easing to help sputs its economy.
China saw its official purchasing managers’ index drop to 50.4 in October from 51.2 in September, against expectations that it would gain ground instead. Beijing’s National Bureau of Statistics said the fall was because of troubled U.S. and European economies. The index came in at its lowest level since February of 2009.
A private sector PMI, on the other hand, according to a Reuters report, rose from September’s 49.9 to an October level of 51.0, the first time that index has topped 50, the demarcation line between expansion and contraction, since June. The combination points toward a status quo in interest rates as China balances efforts to rein in inflation with worries that its explosive growth is finally slowing.