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Global Manufacturing Collapses To Worst Levels Since Mid-2009, Markets "Shrug It Off"

Tyler Durden's picture


News from last night out of China, coupled with early morning news from Europe confirmed what many speculated: namely that global manufacturing is now in a toxic spiral and absent another stimulus kick from various monetary and fiscal authorities there is no catalyst on the horizon to put the global economy into second gear. As Reuters observes, factories in Asia and Europe all but stagnated in July, according to business surveys that showed the weakest rates of growth since major industrial powers were struggling through the 2009 recession. While stock markets rose on signs of a last minute solution that would avoid a U.S. debt default, manufacturing purchasing managers indexes (PMIs) provided the latest evidence of a slowing global economy. The euro zone manufacturing PMI, which gauges the activities of thousands of businesses, fell to 50.4 in July from 52.0 in June -- its worst showing since September 2009 and barely above the 50 mark dividing growth and contraction. Perhaps more worryingly, China's official government PMI dropped to 50.7 from 50.9 in June, its weakest in more than two years, while the HSBC PMI fell below the 50 mark for the first time in a year -- to 49.3 in July from 51.6. Following Friday's horrendous GDP and Chicago PMI readings these are hardly a surprise. Needless to say, the reverse decoupling thesis will be tested once again today after the July ISM is released with consensus looking for a 54.9 print, and Zero Hedge looking for number just a tad above 50. But none of this matters. As Bloomberg's James Halloway points out, "Markets are for now shrugging off Friday’s poor U.S. GDP report, softening PMI prints in China and Germany, contractionary PMI readings for Ireland, Spain, U.K." One couldn't have put the idiocy of the market any better. Oh, and did we mention there is actually still no deal on the debt ceiling. It is merely priced in. As was Tarp 1 before the vote, leading to the biggest then historical collapse in the Dow once the market realized it had gotten ahead of itself. Deja vu coming up?

More from Reuters on what really matters.

In Germany, the euro zone's key growth engine in the recovery thus far, manufacturing growth fell to a 21-month low after new orders contracted for the frist time in more than two years.


"If you're looking at Germany, and if you're looking at the trends over recent months, it does seem as though sentiment in the euro zone has turned down," said Mark Miller, global economist at Lloyds Banking Group.


Miller outlined the difference between the slowdown in China -- which he said was growth responding to a series of interest rate and bank reserve requirement hikes -- and Europe, where economies are close to stall speed.


In some cases, like Greece, they are already contracting.


Even in the UK, which so far has been shielded from the crisis gripping the euro zone, the manufacturing PMI fell to 49.1 from 51.4 in June -- the first time below the 50 mark since the country was in recession two years ago.


"The UK is going through more than just a little local difficulty," said Peter Dixon, economist at Commerzbank.


"You've got a slowdown in global economy and a fall-off in domestic demand, and that's a pretty toxic combination."


While the decline in the UK PMI was worrying, the likes of Spain and Ireland saw contraction among factories only deepening in July.


Emerging market are also taking a hit.


Indian manufacturing growth slowed in July for the third month in a row. The HSBC PMI dropped to 53.6, from 55.3 in June, the lowest level since November 2009.


New export order growth in China, the world's biggest exporter, hit its lowest level in 17 months, the official survey showed.


But HSBC said new export orders in India fell in July at their fastest pace in 29 months and in Taiwan, home to the world's two biggest contract computer chip makers, they fell markedly and for the first time in nine months.


"There is still a lot of uncertainty about how global demand will hold up," said Vishnu Varathan, economist at Capital Economics in Singapore.


Many economists prefer to describe China's economic growth as a slowdown rather than slump. But some say Beijing is treading an increasingly fine balance between fostering growth and fighting inflation, especially as its monetary policy tightening campaign runs into its 10th month.


Bucking the trend, South Korean manufacturing growth accelerated for the first time in seven months in July and new export orders also picked up.

So yeah, aside from the whole global "toxic combination" and economic implosion thing, buying stocks due to the fact that America is not bankrupt surely sounds like a brilliant idea.


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Mon, 08/01/2011 - 07:03 | 1511892 Mongo
Mongo's picture

Green shoots going brown

Mon, 08/01/2011 - 07:52 | 1511969 Setarcos
Setarcos's picture


How about black?

Mon, 08/01/2011 - 07:09 | 1511899 westboundnup
westboundnup's picture

Remember the feeling of impending dread that you had in the late summer of 2007 when the housing market turned and you knew something bad was coming?  I'm having that same exact feeling now.   

Mon, 08/01/2011 - 07:21 | 1511918 Sudden Debt
Sudden Debt's picture

I remember those days pretty well. I was one of the first who was talking about a comming economic crisis back than (it was already happening for 4 months so it's not like I was that fast :) )

All our shareholders back than could figure out that it was bad managment so we started dropping like flies. Out of 42 managers me and 2 other guys are the only onces left from that time. the reason why they didn't fire me back then was because it was to expensive to fire me. but they tried more than once to do so.

the most funny way was by promoting me and after 4 weeks accusing me of the reason for bad sales numbers... my lawyer had a fieldday with that one :)

After that legal tossing, the cost if they would fire me doubled because of harasments :) it went up to 6 years salary, so they left me alone and now I'm still here :) BUT believe me, loyalty to my boss = 0%. I work as less as possible and every question to ask me begins with a answer that sound like:

"OOOHHHH, that's not going to be easy and will be costly. And to be honest, I don't have that much time to...."

If it's something that doesn't really fit into my jobdescription = I need a raise or I won't do it and you can outsource it.



At least now I know how to dig in my heels into the ground once it starts :)


Mon, 08/01/2011 - 07:26 | 1511926 cossack55
cossack55's picture

Reminds me of the old Soviet worker maxim (now being adopted by US workers):

"We pretend to work and they pretend to pay us"

This is some great entertainment.

Mon, 08/01/2011 - 07:31 | 1511931 optimator
optimator's picture

"Stealing stuff from my factory?  Not stealing, they say we own everything."

Mon, 08/01/2011 - 07:34 | 1511935 nikku
nikku's picture

You sound like an excellent employee, and with great spelling skills too... I can see why they'd want to keep you so desperately...

Mon, 08/01/2011 - 08:18 | 1512014 bobert
bobert's picture

I gave you a green arrow.

It's nice to get to know you a bit.

The junkers here probably got pissed at what they perceive as your non-productivity.

Your job, my job, life in general is a bit of a game sometimes isn't it?

Sounds like your employer is getting what they deserve.

Having said that. The best to you as you find, as I'm sure you will, more productive employment in the future.

Mon, 08/01/2011 - 07:26 | 1511925 RemiG2010
RemiG2010's picture

Welcome to Japan! Twenty years of misery have begun. As Munger says: "suck it in and cope baby" Get used to it.

Mon, 08/01/2011 - 08:03 | 1511981 Setarcos
Setarcos's picture

Me too .. and I am in that faux 'miracle' place called Australia, where actually everything is coming undone.

We (not I personally, except indirectly) have "had it good" because our sole main industry has been digging stuff out of the ground, cutting down forests and shipping stuff to Japan, China and wherever.

Our value-added industries were gutted back in the 1980s - familiar story?

I know exactly how you feel westboundup.

Mon, 08/01/2011 - 07:09 | 1511900 RunningMan
RunningMan's picture

Drums, drums in the deep.

Mon, 08/01/2011 - 07:09 | 1511901 GeneMarchbanks
GeneMarchbanks's picture

Foreplay now over can we please get back to the really important events, like the shape of the upcoming QE episode?

Status Quo... bitchez.


Mon, 08/01/2011 - 07:09 | 1511902 tallen
tallen's picture

Durr, it's transitory.

Mon, 08/01/2011 - 07:09 | 1511903 Sudden Debt
Sudden Debt's picture





Mon, 08/01/2011 - 08:21 | 1512019 bobert
bobert's picture

Or perhaps, fill in the pot holes in our roads.

I don't care. Employ people picking up litter.

Best of all - lessen regulations and encourage people to start their own businesses.

Mon, 08/01/2011 - 07:16 | 1511909 Fantasy Planet
Fantasy Planet's picture

We won't need zombie costumes for Halloween. 

Mon, 08/01/2011 - 07:16 | 1511910 Mentaliusanything
Mentaliusanything's picture

The USA is safe as houses. They are rich because they just voted to borrow 2.whatthefuck Trillion minimum more.

Rich people can ride out a Depression.

They can - can't they????


Mon, 08/01/2011 - 07:17 | 1511913 Dr. Engali
Dr. Engali's picture

They sure are giddy on cnbc. You'd think somebody gave them a 2.8 trillion dollar gift or something.

Mon, 08/01/2011 - 09:59 | 1512313 poor fella
poor fella's picture

Thanks for reminding me of the passing circus on cnbs. I was thinking of cartoons and realized Cramer is kind of Charlie Brownish. Somebody should send him the yellow sweater.

Mon, 08/01/2011 - 07:19 | 1511916 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

The inevitable haunts our financial system. Contraction bitchez!!

Mon, 08/01/2011 - 07:21 | 1511919 Landrew
Landrew's picture

We have never been out of recession in my city near Chicago! The city is bankrupt, young people have zero job options and those that are working have higher expenses reducing the volume of goods purchased not the total dollar amount purchased! Meanwhile, yet two more homes go vacant next to me!

Mon, 08/01/2011 - 07:34 | 1511938 weinerdog43
weinerdog43's picture

Yet out here in the far western burbs, my 36 yo financial planner neighbor has undertaken his 3rd home renovation project since he moved in 2 years ago.  This house was in perfect shape when he bought it, but I guess because he's been watching Cramer and CNBC, he's feeling pretty flush right now.

I run into people like this all the time.  "Hey, everything's great!  Just leased a new Acura.  Got the kiddies in karate lessons.  Had a great Alaskan cruise last week.  Restaurants are full.  What are you talking about with this gloom and doom nonsense?"  

The propaganda is immensely strong. 

Mon, 08/01/2011 - 07:24 | 1511922 dervish
dervish's picture

it's getting more and more absurd. watching the news is like a daily freakshow in all aspects and people are in a state of ignorance, maybe never seen in human history

Mon, 08/01/2011 - 08:43 | 1511951 Bob
Bob's picture

Thank Beautiful Bill Clinton:

Of course, Regan paved the way by eliminating the "Fairness Doctrine":

Unfortunately, nobody has yet managed to eliminate the Law of Unintended Consequences.

Mon, 08/01/2011 - 10:04 | 1512343 dervish
dervish's picture

I'm from Germany, but we are not far away from the states regarding insanity. The best still was the Turkish Prime Minister Erdogan on Thursday: "Global Economic Crisis is returning very soon, but it will not even pass near us". Doh!!! It's becoming a who-can-babble-the-most-hilaroius-things-and-get-away-with-it-race

it wouldn't be tragic if those ppl were playing with monopoly-money and not with real peoples lifes and existinces

Mon, 08/01/2011 - 07:25 | 1511923 Chicago bear
Chicago bear's picture

Service economy is growing. McDonalds is hiring. Subway franchises now outnumber McDs. It's all going to even out. Michelle is showing us some good eating examples by ordering apple slices. Markets will be ok.
/sarc off

Mon, 08/01/2011 - 07:34 | 1511937 TSA Thug
TSA Thug's picture

Finally an optimist. Gesh everyone else here is sooo fatalistic, pessimistic, gloomy. Nice to see a positive post on the hedge. Thanks Chicago bear!

My supervisor said he just hired 2 new screeners. I don't know why but he's going to have them in the video control room. They are kinda hot females why hide them in the mushroom factory? There are more screeners in the mushroom factory than at the checkpoints!

Anyway we have an emergency meeting today at 10am. It looks like we have some new equipment that is being delivered and it's suppose to be top secret. Whatever. Do we really need a meeting for this?

I'll talk to you guys later. Ease up on your negative. Disparage causes cancer!

Mon, 08/01/2011 - 07:40 | 1511944 cossack55
cossack55's picture

So do miilimeter-wave and backscatter scanners.

Mon, 08/01/2011 - 07:47 | 1511959 TSA Thug
TSA Thug's picture

Yes, if you live in them. If not you're just making waves.

Todays surprise is coming from PNNL. It should be good. Might cause cancer if you live in it 24/7! If not don't be a dummy!

Mon, 08/01/2011 - 07:46 | 1511957 GeneMarchbanks
GeneMarchbanks's picture

You! TSA thug... you! Are the cause of cancer.

Mon, 08/01/2011 - 07:49 | 1511965 TSA Thug
TSA Thug's picture

Try it you ignoramus. Go ahead and try me! I will knock the stupid out of you.

Mon, 08/01/2011 - 07:58 | 1511979 GeneMarchbanks
GeneMarchbanks's picture

Truly though, you are the aids of society.

Mon, 08/01/2011 - 08:16 | 1512011 EvlTheCat
EvlTheCat's picture

It is nice to see The Bureaucracy is at least giving jobs to convicted pedophiles.  Everyone needs a second... third... fourth... fifth chance don't they TSA Thug?

Mon, 08/01/2011 - 08:40 | 1512064 TSA Thug
TSA Thug's picture

Suspects like you are also given the chance to prove yourself.


Mon, 08/01/2011 - 09:31 | 1512207 EvlTheCat
EvlTheCat's picture

Hey, I was just keeping a positive outlook like you suggested.  I don't need to prove myself because I am a nobody.  I wouldn't even show up on your radar in real life.  People like me are the quiet kind of crazy, you may molest a thousand times over, then who blow and take out half a city block.  You know the kind of crazy that gives you the cold sweats in your sleep.

Mon, 08/01/2011 - 07:25 | 1511924 dearth vader
dearth vader's picture

Not to ignore France, which is on the brink of contraction too

The PMI for manufacturing fell from 52.5 in France in June to 50.5, its lowest since June 2009. The German PMI fell back considerably, from 54.6 in June to 52 last month. That's the lowest level since October 2009. For industry in both countries was a significant decrease in new orders.

Courtesy of via Google Translate.

Mon, 08/01/2011 - 07:30 | 1511928 cossack55
cossack55's picture

More importantly; What of Andorra?

Mon, 08/01/2011 - 07:45 | 1511953 dearth vader
dearth vader's picture

You might be interested in the San Marino PMI, a bellwether for Italy. Their post stamp trade has cratered...

Mon, 08/01/2011 - 07:31 | 1511930 GlassHammer
GlassHammer's picture

Step 1.)

Insert the typical rebuttal:

"Its just a phase"

"Money on the sidelines"

"Opportunities are out there"


Step 2.)

Proceed with malinvestment


Step 3.) 

State "no one could see it coming."


Step 4.)

Repeat step 1.


Mon, 08/01/2011 - 08:10 | 1512001 nantucket
nantucket's picture

"money on the sidelines"

that one kills me everytime i read it.  there's no such thing. 

for every dollar of stock (or bonds) bought by a dollar "coming off the sideline", there is one dollar coming off the field and "going to the sidelines".  People love to say it and they actually think they sound market savvy when they say it. 

It's good though, because it helps me identify the schmucks that don't know jack about markets.  The rubes self-identify.

Mon, 08/01/2011 - 10:09 | 1512375 poor fella
poor fella's picture

Is this officially the 'softest patch' yet?!? And what follows that?!

Mon, 08/01/2011 - 07:32 | 1511932 LikeClockwork
LikeClockwork's picture

Too busy paying down debt and keeping afloat to go shopping means less shit needs making? Whoodathunk?

Short BHP?

Mon, 08/01/2011 - 07:34 | 1511934 Itsalie
Itsalie's picture

HSBC Taiwan PMI firmly in contraction first time since Jan 2009, that did nothing to their stock market or to any Asian markets - it tells you how much robots have taken over the emerging markets; plus the new hedge funds and thousands of bucket shops set up there hire fresh grads at $150k starting salary plus joining bonus, naturally the only criteria is a memory span shorter than goldfish :0 in the past, a Taiwan PMI below 50 would send Asian markets down 3%. So this time  it is different :)

Mon, 08/01/2011 - 07:34 | 1511936 Bob
Bob's picture

He may be a sock puppet, but he's the Fed and Obama's sock puppet, and by God, Mr. Market is happy!

Mission Accomplished.

Mon, 08/01/2011 - 07:36 | 1511941 Version 7
Version 7's picture

Who could have anticipated that capitalism was going to be so short lived.

Mon, 08/01/2011 - 07:42 | 1511949 cossack55
cossack55's picture


Mon, 08/01/2011 - 07:44 | 1511950 Version 7
Version 7's picture

..and its variations too.

Mon, 08/01/2011 - 07:51 | 1511968 Setarcos
Setarcos's picture


Not that I am a Marxist, but, "Capitalism contains within itself the seeds of its own destruction."

The seeds just might be greed and the expectation of exponential growth on a finite planet, but that is just my take and not something Marx ever considered.

Malthus did, though from an elite perspective; an early version of those, today, who want to throw helpless people under a bus, so as to save the banking/finacial system?

Mon, 08/01/2011 - 08:04 | 1511985 Pay Day Today
Pay Day Today's picture

Well I'm Marxian, but I also live in a capitalist world so having it slowly implode around myself is not much fun.

Mon, 08/01/2011 - 08:05 | 1511993 Bob
Bob's picture

Somtimes it's better to be wrong.  Of course, this one was a no brainer, but still.

Mon, 08/01/2011 - 08:21 | 1512020 Setarcos
Setarcos's picture

I agree Pay Day Today.

I was a Marxian myself and have not lost the reasons for why I was; which still pertain today ... social injustice.

Mon, 08/01/2011 - 13:18 | 1513359 malek
malek's picture

Yeah, it turns out to be very just by bringing everyone to the lowest common denominator level...

You might need to reflect a bit on the meaning of egality.

Mon, 08/01/2011 - 21:24 | 1515278 StychoKiller
StychoKiller's picture

Yeah, but some animals are STILL more equal than others!

Mon, 08/01/2011 - 07:53 | 1511971 GeneMarchbanks
GeneMarchbanks's picture

Capitalism? The one put forth by Smith in The Wealth of Nations? That waved bye-bye sometime ago, we need need a more accurate word to describe the freakshow/mutation that survives today. Anybody want to take a stab?

Mon, 08/01/2011 - 08:04 | 1511990 Pay Day Today
Pay Day Today's picture

Crony kleptocratic kabuki capitalism? (CKKC)

Mon, 08/01/2011 - 08:06 | 1511994 Alex Kintner
Alex Kintner's picture

What we have now is Corruptitalism. It's not exactly the same. In Corruptitalism, the rules only apply to the Commoners.

Mon, 08/01/2011 - 08:14 | 1512007 Bob
Bob's picture

Nations are now passe, exept to the extent that they can assume corporate debt.

I call it Corporatism.  Model the economic "person" after a psychopath and this is what you get. 

The movie version:

Mon, 08/01/2011 - 07:41 | 1511947 Setarcos
Setarcos's picture


'Twas bound to happen.

Even in 'mining-dig-in-ground-escaped-the-GFC' Australia (where I am), things are starting to implode ... yes even the housing bubble.

All that aside (at a parochial level) with interest I observe the last minute "agreement" on the "debt crisis" in the US.

The "markets" have bounced back - so I read - but it ain't over 'til it's over, is it!  It ain't Aug 2 yet, nor kicking the can further down the road if, perchance, this "agreement" gets ratified.

May you be cursed to live in the interesting times of brinkmanship, smoke and mirrors, utter corruption, etc..

Mon, 08/01/2011 - 07:54 | 1511975 GeneMarchbanks
GeneMarchbanks's picture

Really?! Has it hit Melbourne yet? Short the Aussie Big Four just as Keen says.

Mon, 08/01/2011 - 08:08 | 1511995 Pay Day Today
Pay Day Today's picture

My friends on the Gold Coast are saying that things are starting to turn appalling. They're looking to pack up and leave ASAP.

Mon, 08/01/2011 - 08:29 | 1512038 GeneMarchbanks
GeneMarchbanks's picture

GC was riddled with speculators in 08, the last time I was in Oz. RE is so overvalued that it makes you wonder how in the hell it hasn't already imploded. We're not too far away, get your shorts in hand.

Mon, 08/01/2011 - 07:47 | 1511958 ViewfromUnderth...
ViewfromUndertheBridge's picture

South Korea and Japan PMI both up...

Mon, 08/01/2011 - 07:47 | 1511960 LikeClockwork
LikeClockwork's picture

Link Dearth?

Mon, 08/01/2011 - 07:54 | 1511972 THE DOCTOR
THE DOCTOR's picture

Here in Australia the customer has died on the vine. two speed economy, mining is booming-rest fucked. first post [hi all]

Mon, 08/01/2011 - 08:07 | 1511997 Setarcos
Setarcos's picture

Hi, THE DOCTOR.  I am in Adelaide.

Mon, 08/01/2011 - 08:11 | 1512002 Setarcos
Setarcos's picture


Fairly new here myself and from SA.

Mon, 08/01/2011 - 08:24 | 1512026 THE DOCTOR
THE DOCTOR's picture

Hi Setarcos, I'm in Melbourne. have been into ZH for the last year or so. 

Mon, 08/01/2011 - 07:54 | 1511973 buck777
buck777's picture

You Americans have so many peas to eat, its fascinating to watch.

Mon, 08/01/2011 - 08:31 | 1512040 bobert
bobert's picture

Help us with you vantage point.

We American's are so near sighted.

Looking forward to you continued posts, that of the Aussie's and other's with international insights.

Mon, 08/01/2011 - 21:26 | 1515285 StychoKiller
StychoKiller's picture

Those peez better be fresh or frozen, canned ones are horrid!

Mon, 08/01/2011 - 08:34 | 1512046 RiverRoad
RiverRoad's picture

So last night was a head fake to cover for the news out of Europe today.  Nothings too good for the world banksters and the IMF it seems.

Mon, 08/01/2011 - 08:41 | 1512068 sbenard
sbenard's picture

Pollyanna smells only rose petals this morning. Wall Streeet's monetary h-h-h-h-heroin addiction continues.

Mon, 08/01/2011 - 10:14 | 1512399 wuzetka
wuzetka's picture

Great call on the ISM reading! Just goes to show that a clear down to earth analysis beats wall street analyst estimates every time.

"consensus looking for a 54.9 print, and Zero Hedge looking for number just a tad above 50" - 50.9 came out. Bravo.

Wed, 09/14/2011 - 04:22 | 1667250 chinawholesaler
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