North Asian PMIs disappoint

China’s October PMI has printed at 51, up from 49.9 in September:

October data signalled a stronger expansion of manufacturing output in China, as overall new business rose for the first time in three months. Renewed growth of new export orders was also signalled, while companies raised their purchasing at the fastest rate since March. Meanwhile, average input costs rose at the weakest pace in four months. In contrast, output charge inflation accelerated…Nonetheless, the index reading was below the long-run trend (52.1), and at a level indicative of a modest rate of growth.

Manufacturing production in China increased for the third successive month during October, with the pace of growth reaching a five-month high. Behind the latest increase in manufacturing output was a renewed expansion of new business. The rate of new order growth was solid, and the fastest since May. Respondents indicated that improved demand conditions had contributed to the rise in new orders.

However, any gloss from the HSBC result was erased by the offical PMI which also came out today(h/t The Lorax). From Bloomberg:

A Chinese manufacturing index dropped to the lowest level since February 2009, bolstering the case for fiscal or monetary loosening to support the expansion of the world’s second-biggest economy.

The Purchasing Managers’ Index fell to 50.4 in October from 51.2 in September, the China Federation of Logistics and Purchasing said in a statement today. That was lower any of 16 economists estimated in a Bloomberg News survey that had a median forecast of 51.8. A reading above 50 indicates expansion.

An index of export orders contracted for the second time in three months as Europe’s failure to resolve its debt crisis dims the outlook for shipments to China’s biggest market. South Korea reported today the weakest export growth since 2009 and Taiwan’s government said yesterday that the island’s economy expanded by the least in two years.

So we have a modest but uncertain bounce in Chinese manufacturing underway but it is not being confirmed in other North Asian countries. Korea came in weak:

South Korean manufacturing sector business conditions deteriorated again in October. This was highlighted by the HSBC South Korea Manufacturing posting 48.0. The latest reading pointed to a third successive worsening of business conditions in the South Korean manufacturing sector. However, up from September’s reading of 47.5, the rate of deterioration slowed slightly.

Manufacturers in South Korea reported a solid reduction in new business received during October. The rate of contraction was consistent with that recorded in the previous survey period. New orders received from export markets also fell, but at a slower rate. Overall, anecdotal evidence suggested that softening global economic conditions had led to a reduction in demand.

Output contracted markedly in October, although the rate of decline was slightly weaker than in September. Despite the fall in new business, backlogs of work rose marginally. This suggested that the drop in new orders had been weaker than expected. However, some panellists commented that initiatives to control stocks, alongside lower new work intakes, had led to the decrease in output. Subsequently, inventories of post-production goods were depleted.

 And Taiwan weaker still:

 

The HSBC Taiwan PMI™ – a composite indicatordesigned to provide a single-figure snap-shot of thehealth of the manufacturing sector – posted 43.7 in October, down from 44.5 in September. The latest reading pointed to a worsening in business conditions that was the sharpest since January 2009. New business received by manufacturers in Taiwan decreased substantially during October. This was primarily driven by a reduction in demand, both domestically and overseas, due to weakening global economic conditions.

Overall new order volumes have now fallen in each of the last five months, although the latest decrease was the strongest in that period. Output reduced markedly, in line with the decline in new work intakes. Nonetheless, backlogs of work at manufacturers in Taiwan fell for a fifth consecutive month. This indicated that spare operating capacity in the sector persisted. The rate of depletion remained marked, and was broadly unchanged since September. Stocks of finished goods decreased for a fourth month running in October. Panellists commented that they had utilised existing inventories as part of initiatives to control stocks.

 There is nothing here for the global equity rally to cheer.

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