Everyone’s a little freaked out about the China’s June Flash manufacturing PMI report, which missed expectations and unexpectedly dropped to a 9-month low of 48.3.
Any number under 50 signals contraction.
However, it’s not just about China. Exports played a big role in this drop. And the collapse in the new export orders sub-index has Societe Generale’s Klaus Baader scratching his head.
A good deal of the weakness was apparently driven by external developments as the new export orders index plunged 4.9pt to 44.0, the lowest reading since the middle of the Great Recession. This collapse is quite difficult to fully believe, given developments in the region and the global economy, where there are no signs of such a collapse of demand.