China Slowdown Continues With Factory Gauge at Lowest Level Since 2016
Bloomberg
Published Dec 30, 2018 20:21
Updated Dec 30, 2018 22:53
China Slowdown Continues With Factory Gauge at Lowest Level Since 2016
(Bloomberg) -- A gauge of China’s manufacturing industry weakened to the lowest level since early 2016, underscoring concerns over the slowing domestic economy and the possibility of a lengthy trade war.
- The manufacturing purchasing managers index dropped to 49.4 in December, falling below 50, which is the line between expansion and contraction
- The gauge of new orders for export, which gives an indication of future demand, was 46.6, down from 47 last month.
- The non-manufacturing PMI, which reflects activity in the construction and services sectors, rose to 53.8 from 53.4
Key Insights
- "The slowdown will continue into the next year," said Larry Hu, a Hong Kong-based economist at Macquarie Securities Ltd. "The weak PMI could result in more government stimulus to shore up the economy."
- The U.S. agreed to postpone a tariff hike on $200 billion of imports from China until March 1 as both sides try to strike a deal over issues such as the alleged theft of intellectual property and technology, trade barriers, and the trade deficit.
- The weak result comes after data showed the slowdown deepening in November, with industrial production growth the weakest in a decade and industrial profits falling for the first time in almost three years. Yet there are some signs of stimulus starting to take effect, with fixed-asset investment rebounding and the surveyed jobless rate improving marginally.
- More government support, including looser monetary policy, more cuts in taxes and fees, and investment to upgrade manufacturing, are expected in 2019, according to the top government planning meeting meeting this month.
To contact Bloomberg News staff for this story: Natalie Lung in Hong Kong at flung6@bloomberg.net;Miao Han in Beijing at mhan22@bloomberg.net
To contact the editors responsible for this story: Malcolm Scott at mscott23@bloomberg.net, ;Jeffrey Black at jblack25@bloomberg.net, Michael Heath
©2018 Bloomberg L.P.
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