|

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

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.

More from Joseph Trevisani
Share:

Editor's Picks

GBP/USD drops to multi-week lows below 1.3300

GBP/USD sets aside Friday’s uptick and breaches below the 1.3300 yardstcik on Monday to hit new multi-week troughs. Falling crude oil prices following a pause in the Middle East conflict in combination with the recent soft reading in UK inflation appear to play against any BoE tightening ahead of the bank’s event later in the week.

EUR/USD meets support near 1.1370

EUR/USD fades the initial bull run past 1.1400 the figure, deflating toward the 1.1370 zone on Monday. That said, the pair reverses two daily drops in a row on the back of the irresolute price action in the US Dollar, at the time when investors continue to closely follow developments from the Middle East conflict. Next on tap is the release of the US Consumer Confidence gauge by the Conference Board.

Gold struggles to extend gains beyond $4,100
Spot Gold gapped higher at the beginning of the new week, as a pause in Middle East hostilities underpinned the mood and weighed on the US Dollar (USD). The XAU/USD pair traded as high as $4,116.20 during Asian trading hours, following a pause in strikes between Iran and the United States (US).
Bitcoin vs Gold: BTC and Gold struggle to gain momentum despite US-Iran truce
Market participants are changing gears on Monday from the war between the United States (US) and Iran in the Middle East to the anticipated Federal Reserve (Fed) interest rate decision. Meanwhile, Bitcoin (BTC) and Gold (XAU) are losing momentum, with BTC slipping below the pivotal $65,000 level while XAU remains sideways in the $4,000-$4,100 range.
Pause in military action fails to inspire market rally
More tech volatility has outweighed the impact of the pause in US-Iran fighting, says Chris Beauchamp, Chief Market Analyst at online trading and investing platform IG. When a calming of Middle Eastern hostilities fails to provoke a major up day in stocks, you know there is more trouble ahead.
US Dollar mid-year outlook: Exceptional currency, exceptional risks?
The US Dollar enters the second half of 2026 in a markedly different position from a year ago. The King currency has recovered, reflecting persistent US inflation, changing expectations for Fed policy, geopolitical tensions and renewed demand for defensive assets.