70 Years Later, China's Factories Show No Signs of Slowing
As the People’s Republic of China (PRC) celebrates its 70th anniversary, manufacturing data shows that factories in the world’s second largest economy improved marginally in September, despite the impact of the ongoing U.S.-China trade war.
According to the private Caixin reading, China’s manufacturing sector grew at its fastest pace since February 2018, with the purchasing manager’s index (PMI) rising to 51.4 in September from 50.4 the previous month. The “official” data, released by the country’s National Bureau of Statistics, was slightly less optimistic. Its PMI reading came in at 49.8. Although still in contraction mode, conditions are clearly heading in the right direction.
U.S. factories, by comparison, shrank at their fastest pace in more than 10 years in September. The ISM Manufacturing PMI fell to 47.8, lower than expectations and signaling a pullback for the second straight month.
“Global trade remains the most significant issue, as demonstrated by the contraction in new export orders that began in July 2019,” wrote Timothy Fiore, chair of the Institute for Supply Management (ISM), which issues the monthly business report.
For his part, President Donald Trump blamed the news of U.S. manufacturing weakness on the “pathetic” Federal Reserve, tweeting that “Jay Powell and the Federal Reserve have allowed the Dollar to get so strong, especially relative to ALL other currencies, that our manufacturers are being negatively affected. Fed Rate too high.”
U.S.-China Trade Truce Coming Sooner Rather Than Later?
The outlook on a truce to the U.S.-China trade war is improving, even as the Trump White House is currently embroiled in an impeachment inquiry. That’s according to Andy Laperriere, head of U.S. policy research at Cornerstone Macro, who visited our office this week.