The world's economic 'canary in the coalmine' has no good news to offer this month

The global economy is slowing, and the world's "canary in the coal mine" has confirmed it.

South Korean exports plunged 15.8% in October from a year ago.

This was the largest decline of the year, and it was notably worse than the 14.5% decline expected by economists.

Why Korean exports matter

Economists look to Korean exports as they are the world's imports. Major traded goods range from automobiles and petrochemicals to electronics such as PCs and mobile devices. Because this report is the first monthly set of hard economic numbers - as opposed to soft sentiment based reports like purchasing managers surveys - from a major economy, economists across Wall Street dub South Korean exports as the global economic "canary in the coal mine."

October's weakness was likely exacerbated by September's strength, which benefited from early shipments to support spending for the Chuseok and Golden Week holidays in Asia.

But Barclays' Wai Ho Leong and Angela Hsieh note that the underlying trend remains weak as exports are down 7.5% year-to-date.

"Our key concern is still the high excess inventories, with the inventory/shipment ratio, which came in at 1.28x in September (Q3: 1.29x; Q2: 1.27x), remaining close to the 1.30x peak reached in December 2008 during the global financial crisis," they wrote.

Exports to the developed markets weren't encouraging

As expected, China's slowing infrastructure buildout was a major source of weakness as the drop in steel, fuel and petrochemicals exports hacked 7.4 percentage points off of growth. Indeed, newly-released manufacturing PMI surveys signaled contraction.

But the western world, which is a bit removed from China's slowdown and the Asian holidays, also showed weakness.

"By destination, shipments to developed markets weakened again, with US-bound exports down 16.0% (Sep: -3.6%; Aug: -4.8%) and EU-bound shipments falling 4.4% (Sep: +19.7%; Aug: -20.9%)," Barclays noted. "The weakness in DM-bound shipments were partly explained by the year-earlier high base, but it also indicated there were little signs of orders for Christmas festive period."

For developed economies like the US and Europe, one of the big questions is to what degree slowing overseas will impact domestic industries.

While European manufacturing is expanding, it's still not much to celebrate.

"The eurozone manufacturing recovery remains disappointingly insipid,"Markit's Chris Williamson said. "The October [PMI] survey is signaling factory output growth of only 2% per annum, a lackluster performance given the amount of central bank stimulus in place. With factory production lacking vigour, employment growth sagging to an eight-month low and output prices falling at the fastest rate since February, it's easy to see why the ECB are considering additional stimulus."

In the US, the regional and national surveys suggest the manufacturing industry is in recession.

Later Monday, we'll get the October ISM manufacturing and Markit manufacturing surveys from the US. Economists are expecting flat to marginal growth. Anything less will only emboldened the bears who are warning that the US economy as a whole is on the cusp of a recession.