China’s official manufacturing PMI beat expectations by the most since Nov 2013 and jumped to its highest since April 2012 – sure it did after all the forget-the-reforms liquidity, QE-lite, and local government spending dragged forward.
Perhaps worryingly the steel industry saw domestic and export new orders crater (from 55.7 to 48.2 in July). The employment sub-index fell once again (now in contraction since May 2012) as large enterprises dominated the upbeat report (medium and small clinging to 50.1 PMIs).
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Japan’s PMI dropped for the first time in 3 months from 50.8 to 50.5 with output contracting and payrolls only marginally positive (slowest since August 2013).
Manufacturers in Japan reported a fall in output from a previous month of growth during July. That said, the rate of contraction was only fractional. According to panellists, the increase in the sales tax was still having a detrimental effect on production levels.
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And then to end the night, Markit/HSBC’s China Manufacturing PMI drops from its Flash 52.0 to 51.7 – perfectly in line with the government’s data.
Markit’s data confirms the ongoing contraction in employment but new export orders surged by the most in 44 months (to whom?)
“The HSBC China Manufacturing PMI rose to 51.7 in the final reading for July, the highest since early 2013. This is slightly lower than the flash reading released earlier, as several sub-indices saw small downward revisions. Nevertheless, the economy is improving sequentially and registered across-the-board improvement compared to June. Policy makers are continuing with targeted easing in recent weeks and we expect the cumulative impact of these measures to filter through in the next few months and help consolidate the recovery.”
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And why not when, pressured from above to ‘frontload’ their outlays, local government expenditures rose 16.4% year on year in the first half (and 6.1% in June alone) while basic tax revenues (i.e., receipts not including land sales) declined by around 4%?
Why not, again, when under the approach of ‘Every stimulus of a macro
import begins with a micro step’, the credit spigots were once more
liberally opened as the quarter wore on, to the point that June combined
the second biggest jump in M1 on record with a 32% yoy leap in ‘shadow’ finance (admittedly that latter calculated from a base which included last year’s quarter-end liquidity shock)?
In any case, what
is clear is that, taking the numbers at face value, debt levels are
still rising with destructive rapidity in order to achieve even such
spotty results as these.
Coming from the broadest perspective, Nominal GDP in the June quarter was an annualized CNY4.7 trillion greater than that of a year a year ago, but in that like period the stock of ‘total social financing’ outstanding mounted almost four times as much, or by CNY17.7 trillion.
via Zero Hedge http://ift.tt/1s8m3SE Tyler Durden