As we know, yesterday’s offical China PMI was dour, it was followed up by the final HSBC PMI today, which dropped marginally since the flash to 48.2. Now we have Korea and Taiwan signalling more of the same.
Korea came in at:
49.4 in June, down from 51.0 in the previous month and pointing to the first deterioration in the health of the sector in five months.
Weaker domestic and international demand reportedly contributed to a lower output level in the manufacturing sector. Panellists also stated that a fragile economic climate affected South Korean manufacturers. Although the rate of decline was only moderate, the respective index was the lowest since December 2011.
Manufacturers experienced a contraction in order book volumes in June, ending a four-month period of expansion. Anecdotal evidence suggested that instability in the European market affected demand.
New export orders decreased in June, the first reduction since January. Falling order book volumes contributed to a contraction in backlogs, according to respondents. Moreover, increasing staffing levels was also a factor leading to a contraction in outstanding business.
Much the same story is apparent in Taiwan:
The HSBC Taiwan Purchasing Managers’ IndexTM (PMITM) is a composite indicator designed to provide a single-figure snap-shot of the health of the manufacturing sector. The PMI posted 49.2 in June, down from 50.5 in the previous month.
Production contracted moderately in June in line with falling new orders. Panellists reported a lower level of orders from US, Chinese and European markets. Moreover, domestic demand was also reportedly weaker.
Manufacturing workforce numbers remained constant in June following a contraction in May. Companies restrained staffing levels as production decreased in line with instability in European markets. Although staffing levels had not changed, outstanding orders decreased at Taiwanese manufacturing companies. The rate of contraction, however, was only moderate.
There’s not much that’s good in the North Asian PMIs then. They are slowing. China perhaps less quickly but not in a way suggesting any v-shaped recovery.
The export powerhouses are signalling trouble for global growth. We’ll need a very big market rally to turn this around.
