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.”
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