We're about to get a look at what is really going on in China

Nir Elias/ Reuters

You may have heard that China is on a tear right now.

Lending in the country has exploded. The government has stepped up spending. Property-purchase regulations have been relaxed.

That all seems to be contributing to a pickup in activity in China's old economy, the one driven by building things.

One way to track that kind of activity is by watching the PMI and nonmanufacturing PMI, which track activity in China's factories and services sector every month.

The newest data will be out this weekend, and it could tell us a lot about the impact the stimulus is having on the ground in China. Both gauges are based on surveys of purchasing managers and show how their business expectations have changed, including production, orders, inventories, jobs, and prices.

It's worth digging deeper into the part of the PMI that focuses on jobs: the employment PMI and the nonmanufacturing employment PMI.

Both gauges have been on a downward trend for a while, creating a headache for Beijing, which is counting on its services sector to offset its manufacturing weakness.

Factory jobs inched up last month but have been lingering below the 50-level mark, indicating a contraction from the previous month. Meanwhile, the services labor market nosedived in the first half of 2015 and hasn't recovered since the market meltdown of that year.

That does not bode well as China seeks to transition from heavy industries to a consumption-driven and services-led economy. Remember, China's labor market is the No. 1 concern for the country's leadership. That is why this next reading of the PMI is so important.

The China Beige Book for the first quarter painted a gloomy outlook for the Chinese jobs market. Only 23% of China's employers are expanding their workforces, according to the report. In contrast, 15% of the companies will shed workers.

We're about to find out whether the same doom and gloom shows up in the official employment PMI numbers.

If it does, there is likely to be trouble ahead.

Nir Elias/ Reuters

NOW WATCH: A quick-thinking cop in China spotted a sinkhole before it even opened, saving people's lives