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Sixth Month-In-A-Row Of Chinese Manufacturing Contraction As Jobs Fall Fastest In 3 Years

Tyler Durden's picture




 

Confirming what we already knew last night, HSBC just announced their final manufacturing PMI (revised slightly higher from the flash PMI) but confirming - via their data - that China is now in its sixth month of manufacturing contraction. Of course this is entirely irrelevant as last night China itself pointed out via its manufacturing PMI data that all was well and in fact the Chinese economy is expanding at its fastest in 14 months. The April HSBC print was modestly higher than the March print (so green shooters will be happy with their second derivatives) but the divergence between HSBC and China on this data point remains vast and digging into the sub-indices we see manufacturing output decreased for the second month in a row, new business fell marginally, but employment was down at the fastest rate in over three years as the need to streamline workforce numbers was cited by many as a response to lower output requirements.

 

 

And updated chart from last night's post...

 

Source: Markit Economics

 

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Tue, 05/01/2012 - 23:42 | 2390220 Floordawg
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Sum ting wong

Wed, 05/02/2012 - 00:00 | 2390248 Floordawg
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Tired and extremely drunk... Just had a drink filled all nighter with a smart and Keynesian... Yes, Keynisian minded great friend, telling me how wrong I am am with my families hard asset (gold, silver and black colored) investments... It's a cruel fuckin' world.

I have throw up in my nostrils.... Sweet.

Wed, 05/02/2012 - 01:22 | 2390327 WonderDawg
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No hard randing, economy randing safery.

Wed, 05/02/2012 - 04:23 | 2390446 goldfish1
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Translated:

"The nation's economy likely will grow faster than what most analysts are predicting, the president of the Philadelphia Federal Reserve said Tuesday in San Diego."

Also this:

"...the U.S. economy is less vulnerable to oil price shocks than it was in the 1970s and 1980s"

http://www.utsandiego.com/news/2012/may/01/economic-recovery-ongoing-sti...

These people are pulling sound bites out of their ass.

 

 

Wed, 05/02/2012 - 06:18 | 2390507 ihedgemyhedges
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"...the U.S. economy is less vulnerable to oil price shocks than it was in the 1970s and 1980s"

True, because companies like Solyndra are lessening our need for.....oh wait.  I mean it's because cars like the Volt are in such high demand and are....oh wait.  Ahhhh, never mind............

Wed, 05/02/2012 - 01:24 | 2390328 Michael
Michael's picture

The American people bailed out the banks. I think the banks should bail out the American people next time.

Universal Bankruptcy Act of 2012.

Wed, 05/02/2012 - 01:56 | 2390355 vast-dom
vast-dom's picture

what wrong is that pork fri ri markets are up like friend wontons tonight! asian markets defy laws of everything, again....spain in the shitter and europe will prob post record highs overnight! fuck this shit!

Tue, 05/01/2012 - 23:43 | 2390221 Manthong
Manthong's picture

None of that silly stuff matters when you have US regime created and published Leading Indicators of Economics (LIE’s).

Wed, 05/02/2012 - 00:06 | 2390222 Dr. Engali
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Ok let's see what to do , what to do? Build another empty city or expand the military industrial complex and prepare for conquest?

Tue, 05/01/2012 - 23:46 | 2390227 rlouis
rlouis's picture

Sum wun not massage numbers enough!

Wed, 05/02/2012 - 01:07 | 2390318 ForTheWorld
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Numbers want happy ending?

Wed, 05/02/2012 - 01:33 | 2390344 Michael
Michael's picture

Anecdotal evidence;

My friend went to Wells Fargo today to get $5,000 cash out. Said they didn't have it then they sent him to a second bank and the second bank said they didn't have it so he went to the main WF bank in the area to get his money.

The third main WF bank had to go into their reserve stock of cash and gave him a bunch of worn out $50's. I said, what the fuck is going on with the banks not having enough cash on hand?

Can you say bank runs in the USA?

Got Popcorn?

 

Wed, 05/02/2012 - 04:38 | 2390456 goldfish1
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Cash? No more cash, loser. You be in training for digit card.

Tue, 05/01/2012 - 23:48 | 2390229 CreativeDestructor
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nothing like having your cake and eating it too... rally!!!!

Tue, 05/01/2012 - 23:54 | 2390238 Dr. Engali
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Twansitowy

Wed, 05/02/2012 - 00:18 | 2390253 q99x2
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When you weren't allowed to sell them a pump to bring water from the well because it would put them out of work they didn't have an employment problem.

Wed, 05/02/2012 - 00:10 | 2390264 XRAYD
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Which CBS reports as:

 

China factory slump eases Activity for Chinese manufacturers shows a smaller decline in April, according to HSBC data.

Wed, 05/02/2012 - 00:12 | 2390268 ekm
ekm's picture

These are masaged numbers also, otherwise the communists would remove the licence to do survey from HSBC.

Wed, 05/02/2012 - 00:23 | 2390281 engineertheeconomy
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China is now using all of its fiat paper to buy Gold at this low U.S. subsidized price so that it can exchange it for crude oil. You don't think they are stupid like the U.S. now do you?

Wed, 05/02/2012 - 00:32 | 2390288 Milton Waddams
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China is the true quasi-NINJA economy.  According to this, there is a huge ponzi going down between state owned banks and black market lenders.  In short people take loans from state owned banks and then re-lend the capital out on the black market.  When the end users inevitably fail to make payments on the black market loans (i.e. real estate values drop / sales of counterfeit gucci purses subside), the interest rate arbitrageur fails to make payments on the original loan to the state sponsored bank... and the ponzi collapses.  

 

 

Wed, 05/02/2012 - 00:57 | 2390316 walküre
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CON-fush-ASS say

In China piper never gets paid. Piper pays you.

Wed, 05/02/2012 - 00:36 | 2390292 Demogorgon
Demogorgon's picture

Should be good for a 200 point rally tommorow...

Wed, 05/02/2012 - 00:50 | 2390313 FinalCollapse
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From what I understand great many people took HELOCs and lend this capital into the shadow banking system for big interest rate differential. China's RE is so leveraged it will make Lehmann collapse feel like a picnick in comparison. The Ponzi scheme is already collapsing and there will be many 'innocent' people hurt. The big speculators will likely walk away unharmed as they have protection from CCP officials. Few of them may be executed to keep the masses happy.

Why do you think all that political circus is happenning now in China? Because some big boys are losing big on RE and there are many angry players seeking revenge. It is always about the money.

Their economy entered decline. All statistics are manufactured to extend and pretend - American style.

Wed, 05/02/2012 - 01:23 | 2390330 What_Me_Worry
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Relax, we're fine.  Krugman said so.

Wed, 05/02/2012 - 01:24 | 2390331 ForTheWorld
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How can anyone think that China, whose seemingly sole purpose in the global economy is to produce anything that is able to be consumed or used by humans (whether it is fit for consumption or not), would not suffer any sort of continued downward trend in manufacturing when the people in westernised societies, who are relied upon to enact said consumption, aren't able to keep up this rampant consumption in the first place?

It shouldn't take any great feat of mental excellence to figure this out, but clearly, it does.

Wed, 05/02/2012 - 01:43 | 2390346 Vendetta
Vendetta's picture

Yep.  Lots of folks have not seen a big deal with massive trade deficits in the US while politicians continue to pursue policies that wil increase the trade deficit.  Somehow the vast majority are not in a panic about it when it, in fact, showed clearly wealth being extracted out of the US but some would justify it by saying we're getting all kinds of great junk for our money.  I give up on these people.

Wed, 05/02/2012 - 02:08 | 2390362 silverdragon
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Fortheworld

While its true Europe and US are slowing down. China also exports to Africa, Asia, South American and the Middle East. China exports to all the countries of the world. Its exports to all these markets are growing everyday. China is replacing its dependence on European and US markets with the rest of the world. Add to that its own people are finally starting to spend a bit of what they have saved. Previously they just bought property and stocks now they are starting to enjoy life by spending a little money on the finer things. With 1.3 billion people all starting to increase their quality of life by spending some of their disposable income and saving a bit less thats a shitload of cash that will be going into their domestic economy. The US and Europe flatlining wont necessarily hurt China as long as their exports to the rest of the world and consumption in their domestic economy continues to grow. The Chinese people unlike most in the west actually have savings, no credit card debt and disposable income.

Wed, 05/02/2012 - 01:33 | 2390343 silverdragon
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Why is anyone quoting HSBC or China data?  They are both nonesense.

The reality is China is intentionally flatlining its own property market.   This is a good thing, property debt to equity ratios are low. A lot of property is now owned outright as you have to pay off the first to buy the second one. Deposits ref property are 30% just to start things off. The China property market may be the healthiest in the world.  The Chinese are addicted to property, its a gift when the kids get married.  A guy finds it really hard to get married if he doesn't have property. Anyone doing OK must put down a deposit for his brothers and sisters if they can not afford the deposit themselves.

The real Chinese economy is ticking along nicely even we foreigners over here in China are expanding at a crazy rate.  Doubling the size of your company while remaining profitable and using cash and no debt is kinda how it is. If a company is growing at 10-20% then it is pretty much struggling. It's kind of hard to lose money unless you have no idea what you are doing. What everyone seems to miss is that the non government controlled economy is growing as fast as it is but without debt.

Companies run by Chinese entrepreneurs are spanking the ball out of the park. As everyone gets richer the domestic buying power grows and our companies turnover and profits continue to grow.

Most people negative about China dont own companies doing business in China. Most people negative about China are just repeating nonesense statistics or nonesense written by people that don't actually know anything about China.

Bottom line, China will go from strength to strength over the next decade.

 

 

Wed, 05/02/2012 - 01:50 | 2390351 Vendetta
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China grows on the destruction of America.

Wed, 05/02/2012 - 06:02 | 2390490 Arthur Borges
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Well, gollygeewhiz, your pseudo says something about your attitude to life but here, you misunderstand the very essence of the Chinese mindset: this is a people of traders: no parner, no trade.

In fact, I dare imagine you may not carefully understand the strict rules governing exercise of vendetta rights.

I'll stop here anyhow.

 

Wed, 05/02/2012 - 02:45 | 2390378 Lednbrass
Lednbrass's picture

Question though- once they have copied your designs and techniques they will need you for...what?

I worked for a company that moved the vast majority of its valve manufacturing to China, and management was continually surprised at the repeated number of pirating problems (and from some of the same repeat offenders).  The early ones were kind of easy to spot, but they got better and better over time until they are now virtually indistinguishable from the originals without metallurgical analysis and comparison with batches used in legitimate production there which is diffiuclt and time consuming.

Sounds like the sun is shining and you are making hay for the moment, not sure I would get too worked up about the long term prospects though. 

Wed, 05/02/2012 - 06:38 | 2390519 Arthur Borges
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China is a society of traders because each side has something to offer and more to offer than what is obvious at first sight. Why didn't the company figure out some sort of co-development enterprise right from the start? When you want to keep all the goodies and profits to yourself and treat locals as so many pairs of biceps and legwork, then you disregard their potential as human beings... and sooner or later their sense of pride, or personal dignity will take offense.

From there, it will move on to countermeasures.

 

Why is this so difficult for Westerners to understand?

Wed, 05/02/2012 - 01:43 | 2390345 MongolGold
MongolGold's picture

I no Job but I ave Inpration a lot. Pukin Pernankey.

Wed, 05/02/2012 - 01:54 | 2390353 MongolGold
MongolGold's picture

@Silverdragon I agree. What people don't want to recognise is America happily became rich while most of the world was still poor. The American centric view can't get its head around the fact China can and will do the same as Americans phoney ponzi wealth is destroyed. China needs to lets its currency increase quicker, its government control has only hindered its market economy not helped as many think.

Wed, 05/02/2012 - 07:01 | 2390557 Arthur Borges
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Silver Dragon, Allowing the CNY to soar skyward has two problems:*

(1) Every jiao (Chinese penny, right folks?) of upvaluation amounts to about USD 2 bln of debt forgiveness to the Fed, and

(2) A soaring CNY will move Western manufacturing to other cheaper nations, reducing the dependency of the US economy on China's: this would make China easier to bully and cut up into about eight different pieces.

Wed, 05/02/2012 - 02:03 | 2390361 skepticCarl
skepticCarl's picture

There's a huge difference between a contraction and a slowing rate of growth.  This article confuses the two.

Wed, 05/02/2012 - 03:05 | 2390386 silverdragon
silverdragon's picture

Lednbrass

The Europeans used to make everything, then the Americans made everything now the Chinese make everything. It is the way of the world.

There are a lot of foreigners successfully doing business in China and even more foreigners making a nice living in China. There are so many opportunities in China now that it is hard not to be successful. There are sad stories everywhere in the world. That's also a part of life.

No one ever said doing business in China was easy but hey where in the world is it easy to do business.

Doing business in China requires establishing real long term business relationships with those you are doing business with. Doing business in China is kind of like the movies portray taking a shower in prison, its best not to pick up the bar of soap.

Wed, 05/02/2012 - 03:14 | 2390392 2012wiki
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Wed, 05/02/2012 - 03:32 | 2390418 RagnarDanneskjold
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If you want to argue the data is wrong, fine. But employment is a lagging indicator and the top line data is improving (slowdown is getting slower). If I read the chart and data dispassionately and ignore other data, it appears net bullish for China. This article presented no other data, say housing, to argue that this data doesn't reflect reality. To spin it at bearish is just that, spin. I'm moderately bearish on China because I think the housing market will cause some problems later this year, but the data from HSBC makes me more cautious, not more confident.

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