News for Credit Professionals       NACM-SE

Newfound Chinese Manufacturing Declines No Reason for Panic

New statistics unveiled by the United States’ and Chinese governments show significant declines in various manufacturing categories for the last month. But, while some in mainstream media cover the happenings with a tone of panic, economists tell NACM that such deep concern is not warranted even if the numbers look poor on the surface.

China’s Purchase Manager’s Index tracked at 49.1 for the most recent period, representing the sixth straight decline in activity out of the manufacturing powerhouse. This came at the same time the U.S. Commerce Department reported a 4.2% decrease in durable (long-term) goods orders in March, the largest slide in about three years.
Despite that, Conference Board Economist Ken Goldstein isn't all that worried about manufacturing seeing a deep downturn in mid- or late-2012 in China. He doesn’t see the manufacturing statistics as foretelling any kind of economic hard-landing there, as feared by some market-watchers.

“Industrial production globally had been slowing but appears to be turning around judging from signals from PMI’s across the globe,” Goldstein told NACM. “China is the exception, not the rule. That sets up the dynamic where their weakness pulls others down or everyone else turns a corner, allowing China to up their exports and cushion their landing. Besides, South Korea just reported an increase in consumer confidence, suggesting the Koreans are not that worried about contagion. If that is true, why should anyone else be?”

Brian Shappell, CBA, NACM staff writer

(Note: China will be front-and-center during creditor-centric discussions on the final day of the FCIB's I.C.E. Conference in Chicago, which runs May 2-4, as well as in FCIB's latest "Doing Business in China" webinar May 9-10. For more information or to register, visit and click the "Events" tab).