China: Manufacturing outlook bright, demand softens – UOB

FXStreet Insights Team FXStreet

UOB economist Ho Woei Chen assesses China’s latest PMIs, noting a positive outlook for manufacturing supported by strong AI-related export demand and robust industrial profits, while domestic demand and services weaken. The report highlights contained overall price pressures but elevated input costs, and sees limited near-term scope for rate cuts despite room for modest policy easing later in 2026.

Manufacturing resilient as services underperform

"China’s official PMIs indicate that the outlook has stayed positive for the manufacturing sector in Apr with limited spillovers so far from the war in Iran as strong AI-related demand continues to drive robust growth in exports. However, domestic demand softened ahead of the Labour Day holidays. Overall price pressure also appeared to be contained although raw materials and producer prices stayed elevated in the manufacturing sector."

"The CFLP manufacturing PMI stayed in expansion (reading>50) for the second straight month at 50.3 in Apr (Bloomberg est: 50.1, Mar: 50.4). The positive outlook is supported by a strengthening in the private sector RatingDog China manufacturing PMI to 52.2 (Bloomberg est: 51.0, Mar: 50.8) – the fifth straight month of expansion and the highest since Dec 2020."

"The CFLP non-manufacturing PMI contracted at a sharper than expected pace by 0.7pt to 49.4 in Apr (Bloomberg est: 49.8, Mar: 50.1), led by weaker new orders and new export orders while business expectations improved from Mar. Both the services index (49.6 from 50.2 in Mar) and the construction index (48.0 from 49.3 in Mar) slipped. The contraction in the selling price index deepened (48.1 from 49.9 in Mar) in signs of relatively soft demand."

"Overall, China’s industrial sector presented a positive outlook with earlier data showing industrial profits rising 15.5% y/y in 1Q26 (Mar: 15.8%, Jan-Feb: 15.2%), supported by recovering producer prices. However, this was uneven, reflecting improvements in industries such as non-ferrous metals (copper, aluminum, nickel), chemicals and telecoms but profits continued to fall in industries including pharmaceuticals, motor vehicles and general-purpose equipment manufacturing in Mar."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

GBP/USD: Downward-sloping trendline near 1.3470 remains key barrier

The British pound faces selling pressure against its major currency peers, trading 0.1% lower at around 1.3420 against the US Dollar during the European trading session on Tuesday.

Euro clings to the bid bias above 1.1500

EUR/USD has picked up pace, reversing Monday’s decline and advancing past the 1.1500 barrier on Tuesday. In the meantime, hopes for a diplomatic solution to the Middle East crisis keep the US Dollar under modest downside pressure, helping spot in its recovery.

Coinbase Bitcoin Premium Index extends historical negative streak as risk appetite deteriorates

The Coinbase Bitcoin Premium Index extends its negative streak to 78 consecutive days on Tuesday, the longest on record. This reading comes amid the ongoing bearish trend, which has seen Bitcoin (BTC) drop by almost 50% from its record high to trade around $64,000.

Why the WTI sell-off may be hiding a supply warning

Prices for the barrel of the American Oil benchmark have fallen sharply as hopes of a US-Iran agreement have resurfaced, but a deeply backwardated Oil curve, tight Cushing stocks and light speculative positioning all warn that the sell-off may have gone too far.

9-3: Is the Federal Reserve’s vote tally Warsh's new forward guidance?

The rate did not move. Neither did the statement, and that’s the more interesting fact. Set the July 29 Federal Open Market Committee (FOMC) statement beside the one issued on June 17, and the two documents are identical apart from a single verb and a paragraph at the bottom naming three dissenters.