Global manufacturing numbers spell more trouble for China

Global manufacturing activity is falling off at an alarming rate. According toThe New York Times, "The pattern of manufacturing and trade ominously recalls how the financial crisis of 1929 grew into the Great Depression: tightening credit and consumer fear reduced demand for manufactured goods in one country after another, creating a downward spiral that reduced global trade."

The news is bad for almost every developed and developing nation in the world. But it is particularly bad for China, where the life's blood of GDP growth is manufacturing goods for export.

The size of the Chinese economy, which is now by most measurements the fourth largest in the world, means that if it moves into a recession, all of the goods that it imports for its factories and consumers could contract at a remarkable rate. If the middle class and factories in the world's most populous nation no longer require as much oil from OPEC or software from the U.S., entire global industries could experience contraction in demand.

Slowing manufacturing may hurt the U.S. less than most countries. For decades unions and many members of Congress have fought the moves by American companies to push their production overseas.

Now, those decisions look like they may save earnings at U.S. firms from some pain. American operations will not have to cut jobs that they sent abroad and they can source goods more cheaply as manufacturers in places like China beg for business to keep their factories open.

Douglas A. McIntyre is an editor at 24/7 Wall St.

Read Full Story
  • DJI26788.10-39.54-0.15%
  • NIKKEI 22522625.3876.480.34%
    Hang Seng26566.73-219.47-0.82%
  • USD (PER EUR)1.11-0.0002-0.02%
    USD (PER CHF)1.01-0.0003-0.03%
    JPY (PER USD)108.510.03800.04%
    GBP (PER USD)1.290.00190.15%