The outlook for China’s manufacturing sector deteriorated further last month, underlining the weakness in the domestic economy just as a new round of tariffs kicks in.
The manufacturing purchasing managers’ index (PMI) dropped to 49.5, according to data released on Saturday by the Chinese National Bureau of Statistics, with sub-gauges showing that domestic and new overseas orders contracted.
A different, private gauge focused more on smaller companies showed manufacturing returning to a state of expansion.
The Caixin PMI rose to 50.4 from 49.9 in July, data released yesterday showed.
In Saturday’s official data there was a pickup in the PMI for small firms, although it was still in contraction.
While the Caixin PMI indicated expansion, “we are not convinced it indicates a genuine improvement in China’s export sector — the focus of the survey. The rise was mainly driven by the production side,” Bloomberg Economics analysts David Qu (曲天石) and Chang Shu (舒暢) said.
In the official PMI report, the index showing prices at the factory door continued to decline, although the renewed contraction of input prices should relieve some of the pressure on company profits.
The economy slowed in July and a set of early data collated by Bloomberg showed the trend continuing last month, with poor sales managers’ sentiment and falling trade.
However, an improvement in small business confidence is a sign that earlier pro-growth measures could be having an effect.
On Sunday, higher US tariffs on about US$110 billion in Chinese imports took effect, as did Beijing’s retaliatory duties on US goods coming the other way.
The Chinese government is not sounding the alarm just yet.
The Chinese State Council released a statement on Sunday saying that overall risks are “controllable” and the economy is stable.
Counter-cyclical adjustments in economic policy would at the same time be increased, it said.
Economists continue to warn that the trade dispute risks dragging the global economy into recession, a development that would ultimately feed through into Chinese domestic demand.
For now, officials might take some encouragement from the relative strength of the services and construction PMI index, which rose marginally last month and remains in expansion.
That partly reflects the long-term shift of the economy away from investment and exports and toward a consumption-led growth model.
Meanwhile, PMIs for Japan, South Korea and Taiwan remained in negative territory.
Japan’s Jibun Bank and IHS Markit PMI fell to 49.3 from 49.4 in July, the eighth consecutive month of contraction.
While South Korea’s IHS Markit PMI rose to 49 from 47.3 in July, it is still showing a contraction.
The three manufacturing nations have been among the most exposed to trade tensions, a cooling technology boom and slowing demand in line with a weaker global economy.
India’s manufacturing gauge slid to 51.4, its weakest in more than a year, from 52.5.
It was a soft picture across Southeast Asia with Indonesia slipping further into contraction — to its lowest since July 2017 — and the Philippines, Thailand and Myanmar all expanding more slowly. PMIs for Malaysia and Vietnam — the weakest and strongest performers in the region — are due today.
SIZE MATTERS: Medium-sized hotels that do not have the support of parent groups are more vulnerable and are forced to take action, a REPro Knight Frank researcher said About 50 hotels across Taiwan are seeking to exit the market as they succumb to the bleak business outlook amid international travel restrictions imposed to combat the COVID-19 pandemic. Yomi Hotel (優美飯店) on Minsheng E Road, Sec 1, in Taipei is seeking to transfer ownership with an asking price of NT$950 million (US$32.15 million) and a pledge for a lease contract that guarantees a 3 percent return. The budget hotel, with room rates that start from NT$1,400 per night, maintains normal operations, but has been struggling since March, when the government placed restrictions on inbound and outbound travel. Occupancy rates for hotels in
With the US dollar expected to weaken in the next 12 months due to near-zero interest rates, investors should consider purchasing US corporate bonds, Standard Chartered Bank Taiwan Ltd (渣打台灣銀行) said on Thursday. The bank said that the US Federal Reserve since last month has been buying bonds issued by US companies to curb default rates. The US dollar is forecast to be weaker against the pound, the euro and the yen, as well as the Canadian dollar, the Swedish krona and the Swiss franc, as the greenback lacks high investment returns after the Fed in March slashed the benchmark interest rate
A Bollywood actor’s face tattooed on his arm, Sandeep Bacche’s devotion shocks few in India where stars enjoy semi-divine status, but even there the hallowed silver screen might be losing its shine to streaming services and pandemic fears. “Whenever things get better and theaters begin operations, I will watch three movies a day for sure just as a way to celebrate,” said the Mumbai rickshaw driver, who is recovering from the virus himself. However, others might not join the party. With cinemas shut for months due to a COVID-19 lockdown, and little prospect they will reopen soon, frustrated Bollywood producers have turned to
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, is to issue NT$13.9 billion (US$469.5 million) in unsecured bonds to help fund its plan to expand production capacity, it said on Friday. In a Taiwan Stock Exchange filing, TSMC said the bonds would comprise three tranches: NT$5.7 billion payable over five years, NT$6.3 billion over seven years and NT$1.9 billion over 10 years. The interest rates would be 0.58 percent on the five-year bonds, 0.65 percent on the seven-year ones and 0.67 percent on the 10-year tranche, TSMC said. Capital Securities Corp (群益金鼎證券) is to serve as the main underwriter in