Here’s some more bad news.
Caterpillar, one of the world’s largest big machine manufacturers, just disclosed 3-month rolling machine sales data that showed sales were down everywhere in June.
Caterpillar is seen as a bellwether of economic activity, as its machines are big, expensive, and used in the kinds of projects — office buildings, large housing developments, mining projects — to which companies and governments are only likely to commit if they’re confident in the economic outlook and their financial standing.
In June, Caterpillar’s total machine sales in Asia were down 19% against last year, yet another reason for those worried about a major slowdown in China to get worried.
In Latin America, machine sales were down 50% from the same month last year, and globally sales were down 14% from June 2014.
In resource industries, which includes things like mining and oil extraction, machine sales were down 14% in Asia, 38% in Latin America, but actually increased 1% in the Europe, Africa, and Middle East segment. Globally, sales in this segment were down 13%.
Construction industry equipment sales were down 22% in Asia, 55% in Latin America, and 16% globally.
And while Caterpillar notes that these figures are reported in constant currencies — meaning that a strong US dollar will negatively impact these figures — this is still not encouraging news for the global economy.
This report also comes the day after Apple reported disappointing iPhone sales, which some analysts were seeing as another sign that we’re looking at a bigger economic slowdown than previously acknowledged from China.
In the second quarter, the world’s second-largest economy reported GDP growth of 7%, better than expected, but still near China’s slowest rate of growth in over 2 decades.
On Tuesday, we saw defence giant United Technologies cut its full-year sales outlook for, among other reasons, “a slowing China.” And in June, Chinese auto sales declined over the prior year for the first time in over two years.
In the past few months we’ve seen a huge sell-off in the Chinese stock market, which has been viewed as either a harbinger of assured global economic doom or not a big deal. But more and more evidence isn’t making things look good for China.
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