China Services PMI Crashes To Record Low

Tyler Durden's picture

At this point these soft-survery-based PMIs are becoming a running joke. Japanese macro surprise data has done nothing (and we mean nothing) but disappoint recently and currently stands at 3-month lows. So it makes perfect sense that July Japan Services PMI would print its first expansion since March. On the other hand, after exploding to 18-month highs in June, China Services PMI collapsed to a 2005 record low. As BofA warned previously, it is important to understand how crude these surveys are - these data get way too much air time. They give a timely, rough read on the economy, but should get little weight once hard data are released.

So with great pleasure we illustrate - The Japan farce... (what happens next!!!)


And China's total collapse...

As Markit so desperately explains:

The headline HSBC China Services PMI came in at 50.0 in July, the lowest reading since the series began in November 2005. Both the new business and outstanding business indices declined from their levels in June. The weakness in the headline number likely reflects the impact of the ongoing property slowdown in many cities as property related activity, such as agencies and residential services, see less business. Meanwhile, the employment and business sentiment indices remain stable. In the coming months, we think the service sector may get some support from the recovery in investment. But today's data points to the need of continued policy support to offset the drag from the property correction and consolidate the economic recovery.”

*  *  *

Here's China's Q1 record surge in credit creation that after sending Q2 economic indicators skyward ...



Has failed to generate any Q3 follow through. Indeed, it appears the Chinese credit impulse, so strong after Q1 when as can be seen on the chart above Chinese banks added a record amount of assets in history, has fizzled out and as the following visualization of the impact of massive credit impulse surges on growth shows, China may be about to suffer a major Q3 hangover.

Maybe - just like BofA suggested - it is time to focus on the hard data instead... HERE and HERE

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LetThemEatRand's picture

Fuck it.  I'm going to go take a swim in Lake Erie near Toledo, and then take a much needed vacation in Africa.  

Oldwood's picture

Optimism is a mental disorder.

LetThemEatRand's picture

I'm optimistic that the worst is yet to come.  

DoChenRollingBearing's picture

If Delfu of China keeps their quality up for their bearings and "Hub and Bearing Assemblies", and their prices stay low, we'll keep buying them for Peru.  

Those pieces are selling very well.  

Price counts in Peru.

* * *

Me too, LTER!  This is going to be great!

Four chan's picture

better than a rectal disorder.

i_call_you_my_base's picture

Agree. Maybe there's a market for depressants.

NoDebt's picture

Western Africa?

You should really take a dip in the warm waters of the Florida Everglades before you head to Africa, especially if you have any open wounds.  Then you could get flesh-eating bacteria and drop those extra pounds you resolved to lose back on New Year's Day.

LetThemEatRand's picture

Good idea, but it's hard for me to type right now.  I covered myself in honey and raw meat in preparation for a hike outside of Anchorage.   

NoDebt's picture

Now there's a man who knows how to party.

LetThemEatRand's picture

Wasn't there a Seinfeld about that?   

IANAE's picture

Not that there's anything wrong with that...

AdvancingTime's picture

The debate continues as to how stable china really is. Much of the recent growth in China after 2008 came from a massive 6.6 trillion dollar stimulus program that expanded credit and poured massive amounts of money into the system. This money encouraged expansion and construction with little regard as to real demand or need.

Like a plane on autopilot China continued in the direction it had been on. Now China finds itself in a credit trap. For years the people of China have had the habit of saving much of what they earn but the low interest rates paid at banks has not rewarded savers. With few investment options much of this money has drifted towards housing and driven housing prices sky high. The economic efficiency of credit is beginning to collapse in China and the unwinding of China’s giant credit spree could be very painful. More in the article below.


Oldwood's picture

The Chinese have lived with so much worse for so long, just about anything is up for them in hindsight. The key is to maintain lowering expectations, as all that is required to retain sustainability is the people's complicity. Stone age man's society was sustainable, just not desirable.

Oldwood's picture

Just keep rubbing it in, like we didn't already know that these numbers mean nothing. Even if they are right, real or accurate, if they are ignored, what relevance do they have?

NoDebt's picture

Exactly.  "It's not a lie if YOU believe it!"  (George Costanza)

I'll believe damned near anything these days.  The alternative (believe none of it) is just too horrible to contemplate.

Its Only Rock N Roll's picture

I am so fucking sick and tired of the word "policy" being misued.  Lets call a fucking spade a spade remove "policy support" and replace with "government life support"

But today's data points to the need of continued policy support to offset the drag from the property correction and consolidate the economic recovery.

We need more policy bitchez!  Bullshit...enough fucking "policy". 

NoDebt's picture

Nothing can be left to market forces any more.  If we didn't tinker with it on a daily basis the whole thing would collapse by next Tuesday.

Like a Stealth fighter, it would fall out of the sky if there weren't multiple computers making constant, minute adjustments to the control surfaces.  

World economies (or more accurately, world banking systems) look nothing like airplanes going through the sky any more.  They're more like flying the Sears Tower with engines and wings attached to them.

This will end well.  Trust me.

Its Only Rock N Roll's picture

Oh I know...its like a bad "B" movie where the flatlined patient is on the table and the team of doctors refuses to stop hitting him with the paddles and squeezing the bag valve mask over and over again.  These fucking guys are screaming "live God damn it live!!!"  "Give him some more adrenaline...force another bag of whole blood in him" 

fucking malpractice

ekm1's picture

This explains why all chinese on TV have long hair.

They are not having haircuts

q99x2's picture

OK Q99X2 scared now. Time to return home to planet without central bankers.

walküre's picture

Earthquake in poor part of China will lift their GDP. Money from nothing and the concrete is free!

jubber's picture

late ramp in HSBC the biggest part of the Hang Seng save the it from rolling over

The Most Interesting Frog in the World's picture

I live outside Washington DC and it appears that new home sales have fallen off a cliff. Construction has literally come to a stop in many new developments. Appears massive over building of apartments as well. Can you say 2008?

orangegeek's picture

china PMI reads 50 - so everything is fine




save chinese PMI - build another empty city