The ability of of China watchers to assess the state of the economy just got harder. Chinese authorities suspended the release of industry-specific data in the monthly Purchasing Managers Index for the manufacturing sector, shutting a crucial window into the economy. Officials blamed time constraints and technical challenges in analyzing the data from over 3,000 companies for the move.
The surprise move comes after China’s National Bureau of Statistics overhauled the data collection methodology for the official PMI index in January. The number of companies surveyed was increased from 800 to 3,000 and the number of sectors streamlined from 31 to 21. This week, China’s official PMI showed the manufacturing sector expanded at the slowest rate in four months, and the unofficial HSBC PMI index showed a slip into contraction.
Concerns about the quality of Chinese economic data aren’t new, though the current economic shakiness raises some anxiety levels. May exports fell sharply to just 1% growth after the government instituted a sweeping crackdown on trade invoicing and capital flows, as well as on foreign-currency loans. Skeptics say the headline GDP numbers are massaged to suit the needs of the ruling Communist party. Even the central bank may be in the dark. In June, the People’s Bank of China intentionally cut off liquidity and sent overnight rates skyrocketing, as part of its efforts to clamp down on bad loans.