China is plunging towards whatever is its version of recession and I see no reason why it will be short. Yesterday’s PMIs were awful. Goldman:
1. The China NBS purchasing managers’ indexes (PMIs) survey suggested manufacturing activity growth moderated in March, likely due to 1) supply chain issues caused by Covid-related restrictions and 2) the impact of geopolitical tensions on international trade, according to the NBS. The NBS manufacturing PMI headline index fell to 49.5 in March from 50.2 in February. Among major sub-indexes, the production index fell to 49.5 from 50.4, and the new orders sub-index fell to 48.8 from 50.7. NBS indicated the industry divergence was significant in March – the output and new order indexes of food, drinks and electrical machinery were above50, while the output and new order indexes of textile, clothes and general machinery were below 45.0. The new export order sub-index fell to 47.2 in March vs. 49.0 in February, and the import sub-index decreased to 46.9 in March (vs. 48.6 in February).
2. The manufacturing employment sub-index decreased to 48.6 in March (vs. 49.2 in February). The raw material inventories sub-index fell to 47.3 (vs. 48.1 in February), while the finished goods inventories sub-index rose to 48.9 from 47.3 in February, likely due to the supply chain disruptions caused by Covid-related restrictions. The suppliers’ delivery times sub-index fell to 46.5 (vs. 48.2 in February), suggesting slower suppliers’ delivery as a result of logistics disruptions due to traffic controls. By enterprise size, the PMIs of large and medium enterprises fell to 51.3 and 48.5 (vs. 51.8and 51.4 in February) respectively, while the PMI of small enterprises rose to 46.6 (vs.45.1 in February).
