The global slowdown is getting worse everywhere

I am still on holiday so posts are short but there was too much evidence of the global slowdown for me to pass up relaying this message to you with the links post. Everywhere the slowdown is getting worse, from the UK, the US auto and manufacturing sectors to Germany, Taiwan, South Korea, China and Australia.

As I have been saying since the end of last year, we have seen slowing growth everywhere. And it’s getting worse. In Europe, we have outright contraction. In the US, we are desperately close to contraction. And Asia is slowing quickly. The Australian PMI was particularly gruesome and suggests to me that Australia’s housing bubble cannot be maintained through this slowdown. The PMI collapsed to 40.3, its lowest level in 3 years. The employment sub-index collapsed to 38.9, while the new orders sub-index dropped to 40.4%. That is outright recessionary. The one bright spot in all of this was Toyota; they are boosting their 2012 numbers. But everywhere else there’s pain.

Here’s the thing, these slowdowns come amid very weak growth that makes recessions (and crisis) more likely. You saw the Stephen Roach video last week about QE. One key that Roach emphasised was the fact that real household consumption growth has grown only at an average 0.7% annualised rate. That compares very unfavourably to the 3.6% annualised growth rate last decade. This is what puts us at stall speed and makes us vulnerable to economic shocks.

China prepares vast stimulus as slump threatens Asia – Telegraph

China Manufacturing Teeters Close to Contraction – Bloomberg

U.S. auto sales remain soft in July | Reuters

Toyota raises 2012 production target on strong demand – Nikkei | Reuters

Euro-Zone Manufacturing Decline Steepens –

U.S. Manufacturing Unexpectedly Shrinks for Second Month – Bloomberg

Taiwan economy shrinks in second quarter –

UK manufacturing figures deal hammer blow to recovery hopes | Business |


Other links

Spain Capital Outflows Reach Record Levels in Euro Crisis – SPIEGEL ONLINE

Yields Lowest in 45 Years Still Cheapest Since ’96: Muni Credit – Bloomberg

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