The bad news: Chinese (and European) manufacturing indexes came in light.

The good news:  While hitting those markets quite sharply, the U.S. premarket has mostly been rallying off overnight lows this AM, hence one could claim bad news is losing its effect.

US manufacturing (ISM) will be released this morning as the last major data point before tomorrow's employment data.  (expectation = 59) Keep in mind this has been the main bright spot in the U.S. economy - unfortunately it now accounts for roughly 13% of GDP and 9% of American employment as we've rushed to get rid of as much mfg capability as possible.

Please note there are 2 reports out of China, one private; one public.  The private report is close to contraction.

Via Bloomberg:

  • Manufacturing growth from China to the euro-region slowed in June, suggesting the global export-led recovery is losing strength.   In China, manufacturing growth slowed more than economists forecast, and a gauge of factory output in the 16-member euro region weakened for a second month, two surveys showed.
  • Today’s purchasing manager index for China indicated manufacturing expanded at the slowest pace in 16 months, excluding a Lunar New Year-affected February 2010.  The government’s Purchasing Managers’ Index declined to 52.1 from 53.9 in May.
  • HSBC's China Purchasing Managers' Index fell to a 14-month low of 50.4 -- just above the 50 mark that divides expansion from contraction -- from 52.7 in May, with both output and new orders dropping outright for the first time since the depths of the global downturn in March 2009.
  • In India, where the central bank has raised interest rates twice since mid-March to curb inflation, the purchasing managers’ index fell to 57.3 from 59 in May.
  • “We expect data to soften from here,” said Jacques Cailloux, chief European economist at Royal Bank of Scotland Group Plc in London. “It’s going to raise some question marks about the outlook, about a double dip. It’s an environment with significant downside risks.”
  • Limited demand in advanced economies has left the world reliant on emerging markets, led by China, to drive a recovery that Group of 20 leaders this week described as “uneven and fragile.” Signs of a slowdown as the Chinese government clamps down on property speculation and the effects of its stimulus package fade have unsettled investors.   Baosteel Group Corp., China’s second-biggest steelmaker, this week scaled back its growth plans, cutting its target for capacity in 2012 by 38 percent and forecasting a “bumpy, unpredictable and long” global recovery.

In Europe ex-UK, a slight dip:

  • The final euro-zone manufacturing purchasing managers index, a gauge of activity based on a survey of some 3,000 manufacturing firms, eased to a four-month low of 55.6 in June from 55.8 in May.   Although manufacturing production, new orders and new export orders all rose for the 11th month in a row, forward-looking indicators in the survey suggested output may have peaked in April.

UK:

  • The bounceback in Britain's manufacturing industry showed signs of cooling last month as export order growth almost ground to a halt, according to latest figures.
  • The Chartered Institute of Purchasing and Supply's (CIPS) activity index, where a reading over 50 indicates growth, eased to 57.5 in June from 58 in May.  Export orders - a key support to the recovery in recent months - slowed sharply as the eurozone debt crisis and a stronger pound hit sales to mainland Europe.