China Flash PMI Shows Further Deterioration
More bad news out of China this evening as the Flash PMI from Markit and HSBC shows further signs of deterioration:
Flash China Manufacturing PMI™ at 48.1 (48.4 in May). 7-month low.
Flash China Manufacturing Output Index at 49.1 (49.7 in May). 3-month low.
Commenting on the Flash China Manufacturing PMI survey, Hongbin Qu, Chief Economist, China & CoHead of Asian Economic Research at HSBC said:
“China’s manufacturing sector continued to slow in June, though the pace of slowdown seems to be slowing. With external headwinds remaining strong, exports are likely to decelerate in the coming months. The sharp fall of prices and moderation of new orders suggest weak domestic demand, posing destocking pressures for Chinese manufacturers. All will likely weigh on the jobs market. As such, we expect more decisive policy stimulus to reverse the growth slowdown.”
Source: Markit
Cullen Roche
Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.
Follow Me:
11 Comments
China will print. It’s all they know how to do.
U miss numbers and central bankers reward u with more money. I wish I had a central banker as a professor at university. The worse I did the more I’d be rewarded.
Summa cum laude central banker style.
they are not printing money that mr. Smith or mr. Ping can spend, they are creating more credit which will not be spent
Sure, they can print whatever they want but if the economy is tanking all that “money printing” won’t help China, or for that matter any other economy, at all.
In some of the biggest industrial area electrical consumption is down 20%. Connect the dots, China is not just slowing. I’m just looking at the data. Government can show fake statistics but cannot print electrical consumption. LOL wake up, someting bigger than the euro farse is coming !
That negative Chinese yield curve is proving to be accurate. 8 months is not a blip, it’s a trend!
Alberto is right. With an economy that is about 55% manufacturing a drop in the electricity usage of that magnitude is foretelling something ominous – a real Black Swan would be a Chinese recession.
Perhaps Chanos will be proven right:
“The Chinese banking system is built on quicksand.”
Read more: http://www.businessinsider.com/jim-chanos-investment-2011-12?op=1#ixzz1yRHfKhF6
Who knows what any of this means anymore.
Is there really a historical precedent for what we’re dealing with?
There are so many moving pieces.
Think about it – we have the US industrialization period in the 20s taking place in China, an attempt to turn the Europe (pre civil war US) into a post-civil war US and the attempt to manage the downside resulting from the largest global credit bubble ever bursting.
Insane.
All I know is that I’ll LMFAO if the SPX goes to new/old highs and gold gets cut in half from here on out…
I think you’ve nailed it (not to mention the arc from Libya to Pakistan. And in these circumstances, your trading approach would seem to make sense as well.)
Given this mix, a true systemic crisis can’t be ruled out, but so far, one hasn’t fully materialized (or else we are like Coyote, not yet realizing we’ve already run over the cliff edge).
However, there is historical precedent for such crises – most recently the 1930′s-40′s; as well as for systemic collapse – dating back at least to the Mycenaean Greek and eastern Mediterranean Late Bronze Age.
This should come as no surprise in a complex and interconnected world. It does, however, fly in the face of all the ‘experts’ who for the past two years have been recommending Emerging Markets as ‘the’ place to invest.
Those who read my posts know I don’t go back and forth. I have been saying for a while China’s landing will be sooner and harder than most expect. Even the bear pundits play it safe by stretching their hard-landing forecast into 2013. My views are dynamic but I only change them when I see solid evidence. Same for the US economy. I have been and continue to be in the new recession/significant slowdow camp (as opposed to muddle through; I.e., Cullen’s view) since ECRI made the call last september. Last but not least, and I will repeat it in the post above. The European crisis will be a lot bigger than subprime and we are yet to see the worse of it.
When the world is run by half-witted (and that is being generous)idiots who are well versed in the art of meetings, bullshit and smiling (none of which are well known as potential foundations for a relevant modern society)then why do you expect any better than what we have today.
Would it be better to be flushed down the toilet or to sit there watching the water in the bath slowly gurgling away knowing that you are going down the plughole at some point because the plug has been thrown away on the scrapheap of misallocated capital.
The Chinese will hit a wall, cliff or freight train sooner or later because they have set up their economy to grow unsustainably forever and that simply can’t, and therefore, won’t, happen. Resource depletion will eventually bring the modern technological world to its knees. Whether it be oil, water, rare earths, phosphate fertilisers or energy we will then learn that we can’t eat money.
RIP