Burton Mills - Manufacturing Growth in China Cools

Burton Mills - Escalating trade row between China and the U.S. affects Chinese factory expansion.

Burton Mills analysts say that a recent survey showed that China’s manufacturing activity expanded at its slowest rate in more than 12 months last month as export orders decreased for a fifth consecutive month and companies were forced to let go of employees.

Burton Mills analysts say the recent data indicates that China’s economy could be in for a slowdown in the coming months as the United States continues to impose punitive tariffs on imported Chinese goods. China will likely resort to more spending and other measures aimed at bolstering the country’s economy.

In August, the Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) dropped by 0.2 percent from 50.8 the month before and meeting Burton Mills analysts’ expectations.

Burton Mills analysts confirmed that although the PMI was above the 50 mark that separates contraction from growth, it was the worst reading in more than 12 months. Although productivity improved slightly, almost all of the other readings were uninspiring.

Burton Mills analysts stated that China’s manufacturing sector had continued to weaken as demand softened and that although supply was still robust, it was not possible to maintain it when demand remained weak.

The problematic employment situation will probably also have an effect on consumption and add to the downward pressures China’s economy is now up against.

The economy was already exhibiting signs of pressure even before the trade dispute with the United States escalated. Borrowing costs were elevated due to debt and a crackdown on financial risks and many companies were struggling to secure funding.

The ongoing trend of weaker export orders indicates that the trade dispute with the U.S. is beginning to take its toll and the impact is being felt by China’s factories.

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Source: Burton Mills