|

China National Bureau of Statistics Manufacturing PMI Preview: Factory recession

  • Manufacturing sector expected to contract for the fifth month in September
  • PMI projected to be unchanged
  • US China trade war trade is a gathering impact

The National Bureau of Statistics will release its purchasing manager’s survey for manufacturing on at 9:00 am CST Monday September 30 in Beijing, 1:00 am GMT Monday September 30, 9:00 pm EDT Sunday September 29.

Forecast

The purchasing managers’ index for September is predicted to be unchanged in September at 49.5.  The range of expectations in the Reuters survey is 49.3 to 49.8.

China runs down

China’s factory sector is showing the dangerous effects of its trade war with the United States as its manufacturing activity is forecast to contract for the fifth straight month.

The official purchasing manager’s index (PMI) is projected to be flat at 49.5 in September. This will be the index’s longest period below the 50 expansion contraction demarcation since the second half of 2015 when the manufacturing sector shrank for seven months from August 2015 to February 2016.

Reuters

Industrial output grew just 4.4% in the year to August. That is the slowest in 17 1/2 years and another sign that the drop in exports and weakening domestic demand is driving the mainland economy to its lowest point in generation.

Reuters

The Chinese economy expanded at a 6.2% pace in the official accounting for the second quarter. That is the lowest of the capitalist era of that began with Deng Xiaoping’s reforms in 1979.  The government’s GDP figures have long be suspected of overstating growth and it was not long ago that the government declared that 8% GDP was the lowest that would ensure social stability.

Reuters

The economic slowdown is primarily due to the manufacturing sector which saw sharp declines in revenue, profits and selling prices according to the China Beige Book International released this week.

US and Chinese negotiators are scheduled to meet in Washington on October 10th for the latest attempt at finding solution to the 15 month trade dispute.

The People’s Bank of China (PBOC) has cut its one-year benchmark interest rate twice in the past two months as a response to the weakening statistics.

Chinese Yuan

The yuan (CNY) has dropped to its lowest level against the dollar since the recession in the past month, breeching 7 in late August and reaching a high of 7.1844 on September 3rd.  It closed at 7.1218 on Friday.  Since the beginning of the trade dispute with the US in January 2018 the yuan has lost 14% against the American currency.

Author

Joseph Trevisani

Joseph Trevisani began his thirty-year career in the financial markets at Credit Suisse in New York and Singapore where he worked for 12 years as an interbank currency trader and trading desk manager.

More from Joseph Trevisani
Share:

Editor's Picks

EUR/USD looks apathetic around 1.1770

EUR/USD comes under renewed pressure on Tuesday, deflating below the 1.1800 support and reversing two consecutive days of gains. The pair’s decline follows the persistent move higher in the US Dollar, as trade uncertainty dominates the sentiment ahead of President Trump’s SOTU speech.

GBP/USD regains 1.3500 and above

GBP/USD extends its advance for the third day in a row on Tuesday, this time retesting the area beyond the 1.3500 hurdle. Cable’s uptick comes despite decent gains in the Greenback and the dovish message from the BoE’s Bailey at the UK Parliament.

Gold appears offered around $5,150

Gold is giving back a good portion of the recent multi-day rally, receding to the $5,150 zone per troy ounce amid the decent bounce in the US Dollar and mixed US Treasuty yields. In the meantime, markets’ attention remain on upcoming comments from Fed speakers.

Crypto Today: Bitcoin, Ethereum, XRP come under renewed pressure amid ETF outflows, tariff uncertainty

Bitcoin, Ethereum and Ripple are trading under increasing selling pressure at the time of writing on Tuesday, as market participants navigate renewed tariff uncertainty. The Crypto King holds above $63,000, down 2% intraday from its $64,656 open.

The Citrini report: How a debatable AI narrative can shake Wall Street

That AI-related headline alone was enough to rattle investors.US stocks slid sharply on Monday after a widely circulated Citrini Research memo outlined a hypothetical “2028 Global Intelligence Crisis”, warning that rapid AI adoption could push US unemployment into double digits as early as by mid-2028.

XRP pressured by weak ETF flows and declining retail interest

Ripple (XRP) is edging lower, trading above its intraday low of $1.32 at the time of writing on Tuesday. The decline from its weekly opening of $1.39 reflects heightened volatility in the broader cryptocurrency market, accentuated by tariff-triggered uncertainty.