Commentary
China these days can serve as a global economic bellwether, and the direction it points is far from encouraging. As the world’s great exporter, its growth depends less on its domestic conditions than on what is happening in the United States and Europe. And because China sources heavily elsewhere in Asia, its export issues have an immediate reflection in places like South Korea and Taiwan. The global picture coming out of this interaction says slowdown, if not outright recession.
Certainly, weakness is the latest message coming out of S&P Global’s world purchasing managers’ index (PMI). Its combined measure of activity in both manufacturing and services fell to a value of 49.3 in August, the most recent period for which data are available. That is down from 50.8 recorded in July and below the 50 level that makes the distinction between expansion and contraction. Aside from a brief period during the worst of the pandemic in 2020, the August figure was the worst since the global recession of 2009. To be sure, it is only one month’s reading, but it should not be ignored….