May 20, 2020

China’s manufacturing growth slows amid US uncertainty

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China’s manufacturing growth slows amid US uncertainty

China saw its manufacturing growth slow slightly in April as export orders increased by less than the previous month.

The Purchasing Managers’ Index (PMI) was released on Monday and noted a fall in growth for the manufacturing sector from 51.5 in March to 51.4 in April – any number over the threshold of 50 still denotes growth, however. Indeed, according to Reuters this was the 21st month in a row that the sector exhibited growth.

Some analysts, according to CNBC, had thought the growth decrease would be even greater, predicting an April PMI figure of 51.3. The news outlet stated that the technology sector, which had contributed greatly to growth in 2017, “could come under pressure as rising tensions between China and the US threaten to hit billions of dollars in cross-border trade”.

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In the services sector meanwhile, China’s National Bureau of Statistics reported the PMI figure grew from 54.6 in March to 54.8 for April. This led to a composite services and manufacturing PMI rising from 54 to 54.1. Reuters called this a “sign of broad economic resilience”.

Chiang Lu, China economist at Capital Economics, stated to clients: “The support to the economy from the easing of pollution controls should now largely have run its course… slower growth is likely in the months ahead as the drags on economic activity from weaker credit growth and the cooling property market intensify.”

According to Reuters, China’s economic growth this year is expected to ease from 2017’s 6.9% figure to 6.5%. Key factors to take into consideration include regularity crackdowns on financial services and the growing US trade dispute.

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