Global Economic Growth Stalls; UK Manufacturing PMI Tumbles To September 2009 Level, China PMI At 10 Month Low
by Tyler Durden
wo more indicators of a stalling global economy came out of China and the UK overnight, where manufacturing Purchasing Managers Indices posted substantial drops. Growth in the Chinese manufacturing sector slowed to a 10-month low in May, with both production and new orders gains moderating during the month, according to the final HSBC Purchasing Managers Index released Wednesday. The final May reading stood at 51.6, up from the May flash reading of 51.1 reading but down from 51.8 in both April and March. Total new orders rose for the tenth consecutive month but at a slower pace than in April, while new export orders contracted for the first time in three months, though the rate of contraction was only marginal. This caused the pace of output growth to slow to a ten-month low, HSBC said. However, the pace of new employment rose at the fastest rate in five months. The rise in input price growth eased to a nine-month low in May. Yet the modest Chinese slowdown was nothing compared to the now confirmed stagflation gripping the UK, where Manufacturing PMI fell from 54.4 to 52.1 in May, weaker than consensus expectations (54.1) and its lowest level since September 2009. As Goldman reports, consumer-facing manufacturers registered the sharpest contraction in output on the month. Some of this is attributable to temporary effects; some may be indicative of more sustained pressure on household incomes. Nowhere was the impact of this more evident than on the GBPUSD pair which took a nearly 100 pip overnight tumble, and has weighed on European markets overnight. Other global PMI readings also confirmed that the world economic is approaching stall speed, which should certainly be favorable for global bizarro stocks.