More bad news from China: China's manufacturing woes hasn't gone away and has reportedly worsened.
From Bloomberg,
China’s manufacturing may shrink for an eighth month in June, matching the streak during the global financial crisis in a signal the government’s stimulus has yet to reverse the economy’s slowdown.
The preliminary reading was 48.1 for a purchasing managers’ index today from HSBC Holdings Plc and Markit Economics. Above- 50 readings indicate expansion. The lowest crisis level was 40.9 in November 2008, when industrial output grew 5.4 percent from a year earlier, compared with 9.6 percent last month.
Today’s report contrasts with comments by officials expressing confidence growth will rebound, with President Hu Jintao saying in remarks published June 17 that China has taken “targeted measures” to boost domestic demand. Asian stocks fell and the yuan weakened for a second day against the dollar.
“Beijing’s policy easing so far has not been enough,” Qu Hongbin, Hong Kong-based chief China economist for HSBC, said in a Bloomberg Television interview. “Probably more needs to be done if they really want to stabilize the growth.”
If confirmed on July 2, the gauge would be at the lowest since November 2011 and equal the run of below-50 readings from August 2008 to March 2009…
The Chinese government signaled a more-aggressive approach to sustaining expansion last month when Premier Wen Jiabao called for more efforts toward stabilizing growth. The People’s Bank of China on June 7 cut interest rates for the first time since 2008 and the economic planning agency is stepping up approvals of investment projects.
Apparently China’s interest rate cuts and stealth SOE based stimulus has yet to weave its magic.
As I have been saying, China persists to show signs of reluctance or has continually dithered to engage in aggressive stimulus, perhaps until the national elections this October.
The ongoing slowdown (or perhaps a bubble bust?) in China’s bubble economy has been consistent with the recent downdraft of commodity prices, despite the US Federal Reserve’s half-hearted extension of Operation Twist.
For now, BAD news is BAD news.
Much of Asia, as of this writing, has been in the red except for Japan and the Philippines. Most of the damage can be seen in China’s Shanghai index who seem to suffer from a technical breakdown.
If GLOBAL political agents will continue to withhold steroids from the steroid-starved or stimulus-addicted financial markets, expectations will likely reverse soon.
And that reversal could be swift, deep and dramatically violent.
Be very careful out there.
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