China’s manufacturing contracted by the most on record and export orders slumped as a slowdown in the world’s fourth-biggest economy deepened.
The Purchasing Managers’ Index fell to a seasonally adjusted 38.8 in November from 44.6 in October, the China Federation of Logistics and Purchasing said today in an e- mailed statement. Export orders, output and new orders all contracted by the most since the survey began in 2005.
China’s export orders declined to 29 in November from 41.4 in October, the survey showed. A reading above 50 reflects an expansion, below 50 a contraction. The output index fell to 35.5 from 44.3, while the index of new orders dropped to 32.3 from 41.7.
Weaker demand for Chinese goods and a slump in construction are undermining growth. China last month announced a $586 billion stimulus package and the biggest interest-rate cut in 11 years to revive the economy and counter the risk of spiraling unemployment and social unrest.
Thurgy: In Feb 2007 people were not concerned if China blew up because of decoupling (the rest of the world would carry on). In Feb 2008 people were not concerned over the US because China and the emerging markets will carry the rest of the world. In the Summer of 2008 the BRIC's "blowed up".
Where There Is Opportunity - I was interested to see that retail traders opened a large number of accounts and increased their trading at E*Trade, even as customer assets dwindled. This pattern also manifested itself at Ameritrade and at Schwab. Indeed, according to one report, eight of the ten busiest days at Scottrade were during October, with the number of new accounts running three times the average level. It appears that volatility is bringing out the speculative sentiment among individual traders. Perhaps in response to the growing interest in trading, Scottrade has begun a program of free trader education at their branch offices. It's an interesting venture; over time we may see retail brokers developing their customers much like prop firms develop their traders.
Thurgy: More evidence the rally can go for a few weeks. However, this also is more evidence we haven't seen the bottom yet.
