MaxedOutMama
Monday, February 02, 2009
Ugly Asian Numbers
I might need more than gymnastic comedy to overcome this set of depressing numbers. South Korean exports down 32.8% YoY in December. Japan's industrial production fell by 9.6% in December. Catastrophic.
A while back I reviewed the history of the worst WWII declines and said that we were on pace to do even worse. If you focus on Asia, that now appears to be happening as I whimper. South Korean exports to China have been falling very rapidly, and exports are 45% or more of their economy. Double digit negative, it looks like.
The problem is world aggregate demand. Japan is the world's second largest economy, and this fall is deep enough that their downturn in domestic demand is going to deepen. Unemployment grew more than 10% in one month - December.
Who is left to buy? The US consumer isn't going to be providing much in the way of increased demand. The hope is that we can get to a point in 2009 when things stabilize for consumer spending. An internal Chinese study suggested that 20 million (about 15%) of the rural-to-city migrant workers have lost their manufacturing jobs there. These people are not "official" residents of their workplace sites, so they are not eligible for job loss benefits and not counted in the official unemployment stats, which were variously estimated to be 6-8 million. They have to go back home if they don't find other work. That is a huge rise in unemployment.
Anyway, the results from S Korea and Japan indicate that the Chinese economy is likely slowing faster than anticipated, and even though China's stimulus plans are pretty large, they obviously haven't kicked in yet. China appears to be in the same spot that the US was during the 06/07 transition. Property bubble ending, consumers not yet clued in, but some industries already feeling significant pain. It will be a long road.
JPM ISM world manufacturing showed a slight move up for January, but the reading was still in the contraction range. US ISM manufacturing also improved from 32.9 to 35.6, which is still a contraction. New orders increased 10.1 to 33.2.
However, current US figures really don't matter too much if the situation overseas keeps worsening. What goes around comes around!
A while back I reviewed the history of the worst WWII declines and said that we were on pace to do even worse. If you focus on Asia, that now appears to be happening as I whimper. South Korean exports to China have been falling very rapidly, and exports are 45% or more of their economy. Double digit negative, it looks like.
The problem is world aggregate demand. Japan is the world's second largest economy, and this fall is deep enough that their downturn in domestic demand is going to deepen. Unemployment grew more than 10% in one month - December.
Who is left to buy? The US consumer isn't going to be providing much in the way of increased demand. The hope is that we can get to a point in 2009 when things stabilize for consumer spending. An internal Chinese study suggested that 20 million (about 15%) of the rural-to-city migrant workers have lost their manufacturing jobs there. These people are not "official" residents of their workplace sites, so they are not eligible for job loss benefits and not counted in the official unemployment stats, which were variously estimated to be 6-8 million. They have to go back home if they don't find other work. That is a huge rise in unemployment.
Anyway, the results from S Korea and Japan indicate that the Chinese economy is likely slowing faster than anticipated, and even though China's stimulus plans are pretty large, they obviously haven't kicked in yet. China appears to be in the same spot that the US was during the 06/07 transition. Property bubble ending, consumers not yet clued in, but some industries already feeling significant pain. It will be a long road.
JPM ISM world manufacturing showed a slight move up for January, but the reading was still in the contraction range. US ISM manufacturing also improved from 32.9 to 35.6, which is still a contraction. New orders increased 10.1 to 33.2.
However, current US figures really don't matter too much if the situation overseas keeps worsening. What goes around comes around!
