Morning Mumble: Tangents, (Bank Holiday) Chinese PMI Data & GDP down at 6.8% and PMI Data, India, Indonesia and China + Robotics.

Good Morning, or as my daughter greeted me this morning, Happy Me Birthday, she's decided to have another this year! 

A significant amount of news came out, (unfortunately). China's economy seen slowing to 6.8 percent in Q2 - state think tank. The Markit PMI data was released Chinese PMI Data, Indonesian PMI Data and Indian PMI Data (all worth a read). With similar themes a slowing down, deterioration and reducing rates of growth. India appears to be showing some resilience after a corking data set in March, albeit not absent of the same woes. 

There is a distinct absence of commentary on the shift in Chinese labour patterns and the implications of such changes. Automation is rapidly gaining traction in the Chinese economy, making the choice viable as salaries have increased in addition to the production wastage. Perhaps it needs to be defined as the silent threat for China and a consequence of its own achievements and growth. 

The Chinese government stimulus has little choice but to also focus on self-employment and small business development. Although China's growth will be positive, the slowdown is going to demand greater efficiencies both in production and salary costs, and as a consequence improvement in margins (read as reduced wastage). A bottom up approach to the economy is likely to be slower in growth terms but make for a stronger economy longer term, rather than wasted stimulus.

Over the longer-term labour demands and needs will be less intensive, with a knock-on readjustment in wages and a contraction of salaries in manufacturing. Obviously with the state owned businesses initiating wage cuts for senior managers back in January (2015), this will have warped impact on the current data but the trend and significance should not be ignored. 

The issues (automation and efficiency) are now being seen as having ay modest impact on the Chinese urban employment figures. China is focusing, or attempting to focus on the development of the "internet of things" (known in China as Internet Plus) in order to offset the modest the change in the economy. 

One could make a very good case for the wastage being cut out of the economy, leaving a normalised growth.

Have a good bank holiday Monday! 

Atb Fraser