China's Factory Slowdown Is a Bigger Deal for Robotics Than You Think
The May PMI numbers look bad, but the real story is what happens to automation investment when orders dry up.
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Look, I've been watching Chinese manufacturing data for longer than some of my editors have been alive, and the May numbers coming out of Beijing have me more concerned than the headlines suggest.
The official PMI slipped again. Bloomberg is calling it a "warning sign for the economy," which is the kind of understatement financial journalists get paid to write. A private survey of export-oriented firms tells basically the same story. The world's factory floor is cooling off.
Now, some folks will read that and think: so what? Factories slow down, factories speed up. That's the cycle.
Here's the thing. When I was at Kuka, we had a saying: automation investment is the first thing cut and the last thing restored. I watched it happen in 2015, again in 2019, and I'm seeing the setup for it now.
The numbers
The official manufacturing PMI dropped below 50, which means contraction. The private Caixin survey, which skews toward smaller export firms, showed similar softening. A five-day holiday in May didn't help, but that's not the real story. The real story is input costs from the Middle East situation and weakening global demand hitting at the same time.
I don't have exact figures on robotics orders (the IFR data lags by months), but I called an old colleague who still does sales in Guangdong province. He said quote requests are down maybe 30% from Q1. That's anecdotal, one guy's experience, but it matches what I'm hearing elsewhere.
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