Search ForexCrunch

Lan Shen, Economist at Standard Chartered, points out that their China SMEI reading (Bloomberg: SCCNSMEI ) shows that SME activity started losing momentum in June.

Key Quotes

“The headline SMEI reading fell to 56.0 in June from 58.3 in May, and the growth momentum index weakened to 10.7 from 15.0.”

“All three sub-indices retreated in June. The ‘current performance’ sub-index dropped 3.1ppt to 57.1, and the ‘expectation’ sub-index eased 2.9ppt to 59.2, reflecting downside risk in the economy.”

“The ‘credit’ sub-index also softened, and was the lowest among the three at 51.7,  suggesting worsening financing conditions for SMEs.”

“Real activity showed signs of stagnation in June mainly due to cooling demand on slowing economic growth and a plateau in exports, squeezed profitability on rising raw-material prices, and worsening financing conditions for SMEs.”

“Slowing economic growth adds to the case for more accommodative monetary policy, in our view.”