The numbers are in, and they are predictably bad.
And by “the numbers”, I mean China’s official February PMIs. And by “bad”, I mean the lowest on record.
The manufacturing gauge tumbled to 35.7 in February, some 10 handles below consensus, although given the circumstances, it’s not clear it even makes sense to refer to economist estimates. Nobody had any real idea how these numbers were going to come in, other than that they would invariably reflect the shut-ins, quarantines, travel restrictions and draconian lockdowns imposed in the frantic effort to contain the spread of COVID-19.
As you can see, the non-manufacturing gauge printed sub-30. Specifically, the official services PMI for February is 29.6. The “estimate” listed on Bloomberg is 50.5, but, again, that cannot be taken seriously.
The composite PMI for the month printed 28.9.
To reiterate, everyone expected these numbers to be egregious. After all, economic activity ground to a standstill in the world’s second-largest economy. Auto sales through the first two weeks of the month cratered more than 90%, for example.
In short, China’s economy was barely functioning.
It’s important to note that things aren’t back to normal, and probably won’t be for weeks (at least).
Here are a trio of updated charts from those made available to the public by Capital Economics on their free COVID-19 monitoring page:
Obviously, one can produce an endless number of these types of catastrophic-looking visuals considering the sheer scope of the measures adopted in the wake of the epidemic, which, to date, has infected more than 78,000 Chinese.
Seen in that light, the February PMI figures are good for little more than shock value.
But just as audiences still get a thrill from clichÃ©d plot devices in horror movies, market participants will perversely enjoy being briefly jolted by a the worst Chinese PMIs on record.