The trade war hits more than expected and the results of Chinese manufacturing activity are below the forecasts of economists
The negative consequences caused by the trade war between the United States and China were foreseen. However, Chinese manufacturing activity has been hit more than expected. In particular, the official PMI – a gauge of sentiment in the manufacturing industry – fell to 50.2 in October, below the median expectation of 50.6 in a Bloomberg survey of economists and the 50.8 posted in September.
According to the official purchasing managers’ index (PMI) released on Wednesday, since in September the US has imposed tariffs on $ 200 billion of Chinese imports, activity in China’s factories slowed more than expected, and in particular in October.
Activity in China’s factories slowed more than expected in October
The October reading does not mean that Chinese manufacturing activity has problems, but that in October it simply did not grow as in the previous months. Furthermore, the last figure is just above the break-even level of 50 that separates the expansion from the contraction in the sector.
In addition, to this first official data – the official PMI is seen as an effective gauge of sentiment among larger, mostly state-owned enterprises – should also be added the Caixin PMI, a system that calculates the trust between small businesses mostly private, and that will be published on Thursday.
The official PMI is produced jointly by China’s National Bureau of Statistics and the China Federation of Logistics and Purchasing
The manufacturing sector is directly affected by the tariffs Washington has placed on US$250 billion of Chinese imports. The October reading is the first since the US placed a 10 per cent tariff on US$200 billion of Chinese goods on September 24.
Trump said in a television interview on Monday night that he expected the trade conflict to result in a “great deal” for the US and repeated that the additional sanctions on all Chinese imports were “ready to go”.
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