China National Bureau of Statistics Manufacturing PMI Preview: Factory recession
- Manufacturing sector expected to contract for the fifth month in September
- PMI projected to be unchanged
- US China trade war trade is a gathering impact
The National Bureau of Statistics will release its purchasing manager’s survey for manufacturing on at 9:00 am CST Monday September 30 in Beijing, 1:00 am GMT Monday September 30, 9:00 pm EDT Sunday September 29.
Forecast
The purchasing managers’ index for September is predicted to be unchanged in September at 49.5. The range of expectations in the Reuters survey is 49.3 to 49.8.
China runs down
China’s factory sector is showing the dangerous effects of its trade war with the United States as its manufacturing activity is forecast to contract for the fifth straight month.
The official purchasing manager’s index (PMI) is projected to be flat at 49.5 in September. This will be the index’s longest period below the 50 expansion contraction demarcation since the second half of 2015 when the manufacturing sector shrank for seven months from August 2015 to February 2016.
Reuters
Industrial output grew just 4.4% in the year to August. That is the slowest in 17 1/2 years and another sign that the drop in exports and weakening domestic demand is driving the mainland economy to its lowest point in generation.
Reuters
The Chinese economy expanded at a 6.2% pace in the official accounting for the second quarter. That is the lowest of the capitalist era of that began with Deng Xiaoping’s reforms in 1979. The government’s GDP figures have long be suspected of overstating growth and it was not long ago that the government declared that 8% GDP was the lowest that would ensure social stability.
Reuters
The economic slowdown is primarily due to the manufacturing sector which saw sharp declines in revenue, profits and selling prices according to the China Beige Book International released this week.
US and Chinese negotiators are scheduled to meet in Washington on October 10th for the latest attempt at finding solution to the 15 month trade dispute.
The People’s Bank of China (PBOC) has cut its one-year benchmark interest rate twice in the past two months as a response to the weakening statistics.
Chinese Yuan
The yuan (CNY) has dropped to its lowest level against the dollar since the recession in the past month, breeching 7 in late August and reaching a high of 7.1844 on September 3rd. It closed at 7.1218 on Friday. Since the beginning of the trade dispute with the US in January 2018 the yuan has lost 14% against the American currency.
Author
Joseph Trevisani
FXStreet
Joseph Trevisani began his thirty-year career in the financial markets at Credit Suisse in New York and Singapore where he worked for 12 years as an interbank currency trader and trading desk manager.
