China’s PMI Shrinks For The 4th Consecutive Month Due To Trade War

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As US tightens its grip over trade war, Chinese factory activities were low for the fourth consecutive month due to the local demand being sluggish. This is pointing towards yet another slowdown in the world’s second largest economy.

The continuous exposure of weaknesses in china’s economy is a sign that the government may have to roll out stimulus earlier and quicker than expected and also they need to send it out aggressively in order to counter the biggest threat to their economy in a decade. The Purchase Manager’s Index or PMI of China fell to 49.5% from last month’s 49.7%. This is the 4 month in continuation that this index has been falling. The index differentiates growth of the economy and its contraction. The analysts were expecting it to be unchanged. Apart from all this, the official factory gauge has shown signs of increasing trade friction with US and the globally decreasing demands have further added to the miseries of China.

In August, for the 15th consecutive month, the export orders were on a decline. Although the sub index saw a bit of growth as it rose to 47.2 from last month’s 46.9.

This month has seen an escalation in China’s problems on the trade front as Trump continues to impose tariffs and aggressively handling the situation, despite having troubles in American market as well. Amidst all these miseries, service sector gave a relief to China’s wounds as it saw a rise after 5 months of turmoil. Chinese service sector picked up a bit of activity and rose to 53.7 from previous month’s 53.6.

China has been relying on their service sector to cover up for their other downfall but despite the service industry’s growth, the overall economy shows signs of contraction. The reason behind the rise of service sector’s growth is the increased wages of Chinese citizens that allows them to spend more money on various services in recent years. The rise was a relief after the industry softened due to a broader slowdown last year.

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