“A simultaneous drop in both U.S. and Chinese manufacturing threatens to give the global economy a double whammy.
American manufacturing companies reported fewer orders in May — the largest drop in their business in almost four years. The Institute for Supply Management (ISM) index fell from 50.7 percent to 49 percent, the third straight monthly drop.
Meanwhile, the China HSBC Purchasing Managers’ Index (PMI) dropped to 49.2 percent from 50.4 in April, the lowest since October 2012.
“This is not a good moment for the world economy,” David Bloom, currency chief at HSBC, told the U.K.-based Telegraph. “The manufacturing indices came in weaker than expected in China, Korea, India and Russia, and then we got America’s ISM.
“We thought we had a clear picture that the US was recovering, Japan was printing money and were we’re back to happy days, and now suddenly a huge spanner has been thrown in the works.”
Business executives attributed the drop in orders to falling government spending, a slowdown in China and a downturn in Europe.
Tightening fiscal policy in the United States is squeezing consumer spending, according to The Telegraph.
“People have been living in a psychological bubble,” Charles Dumas of Lombard Street Research told The Telegraph. “They ignored the cuts but now they are starting to feel it.”
The ISM drop came as a surprise….”
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