China’s economy slowed this month for a sixth consecutive month, as the ongoing trade dispute with the US continued to weigh on the outlook for economic growth.
That is the signal from a Bloomberg Economics gauge aggregating the earliest-available indicators on business conditions and market sentiment.
The data suggest recent government actions to support households and private companies have not been enough to immediately boost the economy and allay concerns about the nation’s growth trajectory.
“Early indicators point to further weakness in the Chinese economy,” Bloomberg chief Asia economist Chang Shu (舒暢) said. “The economies of China’s major trading partners continued to decelerate. The weakness in the equity market would not only impact sentiment, but also constrain firms’ liquidity.”
The trade spat continues to create uncertainty for China, and although US President Donald Trump and Chinese President Xi Jinping (習近平) plan to meet this week, there is little sign of a breakthrough that would stop further planned tariff increases.
The first official Chinese economic data for this month, the purchasing managers indexes (PMI) for the manufacturing and non-manufacturing sectors, is to be released on Friday morning in Beijing.
The manufacturing gauge will probably be unchanged after falling to the lowest level in over two years last month, while the non-manufacturing gauge, which covers construction and services, is forecast to tick lower.
The dimmer outlook comes despite an unexpected acceleration in export growth last month, as shippers sought to get goods to the US ahead of the planned increase in tariffs that is to take effect in January.
Data from China’s major trading partners suggest external tailwinds are waning alongside domestic demand.
The weighted average of the flash PMI readings of nations including the US, Japan and the EU moderated for a seventh straight month this month — to the lowest level in two years — although it remained in expansion territory.
Chinese factory inflation continued to slow, reaching the lowest level since October 2016. The moderation bodes poorly for profit margins amid a faster pace of increase in input costs.
Investor sentiment this month was mixed. The benchmark Shanghai Stock Exchange Composite Index edged lower, although the decline was nothing like last month’s plunge.
Property stocks rose more than 3 percent, marking the best month for the sector since January. Copper prices increased, while iron ore prices fell.
Chinese companies remain pessimistic. An index of business confidence among small and medium-sized enterprises maintained by Standard Chartered ticked higher, but the rise was mainly driven by a modest improvement in credit conditions, according to Shen Lan (沈蘭), the Beijing-based economist in charge of the bank’s survey.
“Real activity weakened as the business outlook stayed downbeat. This was reflected in sluggish domestic sales, poor investment appetite, falling financing demand and softer hiring,” Shen said in a report on Tuesday last week.
“Inventory of both raw material and finished goods has shrunk in November, reflecting ongoing de-stocking amid weak demand and rising uncertainty,” she said. “Profit margins have been squeezed, especially in lower-stream industries.”
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
EUROPE ON HOLD: Among a flurry of announcements, Intel said it would postpone new factories in Germany and Poland, but remains committed to its US expansion Intel Corp chief executive officer Pat Gelsinger has landed Amazon.com Inc’s Amazon Web Services (AWS) as a customer for the company’s manufacturing business, potentially bringing work to new plants under construction in the US and boosting his efforts to turn around the embattled chipmaker. Intel and AWS are to coinvest in a custom semiconductor for artificial intelligence computing — what is known as a fabric chip — in a “multiyear, multibillion-dollar framework,” Intel said in a statement on Monday. The work would rely on Intel’s 18A process, an advanced chipmaking technology. Intel shares rose more than 8 percent in late trading after the
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure