The first day of every month sees the release of a whole bunch of manufacturing data around the world.
How was it this time around?
Let’s just say that July wasn’t the busiest month for global widget makers.
The home of widget manufacturing, Asia, had a sluggish month indeed. The economic slowdown in Europe and the US is starting to bite. Check out these stats, complied and released by Markit Economics. Keep in mind that anything below 50 indicates contraction.
Korea – 47.2
Japan – 47.9
Taiwan – 47.5
Singapore – 49.8
Vietnam – 43.6
China – 49.3
India – 52.9 (down from 55 in June)
And when it comes to manufacturing data, guess how Australia fared?
We came in at a dismal 40.3. Well, at least we’re doing better than Greece and Spain, you might think.
You’d be wrong. Greece recorded 41.9 for July while Spain’s reading was 42.3. The only strength in Australia’s report was wages growth. It soared 12 points in July to 71.4. But rising wages on lower demand is not a good combination for profit margins.
Our manufacturing sector is dying, and yet our national angst (if the media is any guide) is directed towards the state of James Magnussen’s mind.
The only difference between Australia and the European countries that we often ridicule is that the market hasn’t shut off our tab yet. We’re still at the bar drinking. The market thinks we’ll remember to pay our bill in the morning.
This view pushes our currency to levels that choke manufacturing and render us globally uncompetitive. Bizarrely, it improves our relative wealth at a time when the basis of that wealth (the commodities boom) is clearly faltering.
Nothing makes sense anymore. Global capital is in the hands of the speculators, rushing around wildly, playing a mad game of hide and seek. They think Australia is a good hiding spot. It won’t be long before they’re caught.
In other news, last night Fed chairman Ben Bernanke didn’t throw the market as big a bone as they were hoping. Now it’s all eyes on ‘Super’ Mario Draghi from the European Central Bank tonight. Because when everything’s screwed, your friendly central banker is all you have to rely on. Nick Hubble will have more on Mario tomorrow.
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From the Archives…
How China is Still Making Steel, But There’s No Real Demand
27-07-2012 – Greg Canavan
Governor Glen Stevens and the Art of Central Bank Speech-making
26-07-2012 – Greg Canavan
Australian Mining Tax Policy to be Abolished, Pigs to Fly
25-07-2012 – Nick Hubble
The LIBOR Fix
24-07-2012 – Satyajit Das
Has Australia Blown the China Boom?
23-07-2012 – Greg Canavan