China’s Manufacturing Sector to Remain in Contraction in October: Reuters Poll
According to a recent Reuters poll, factory activity in China is expected to have continued its decline for the sixth consecutive month in October, as the manufacturing sector still reels under the effects of the trade war. The Caixin Manufacturing PMI is expected to come in at 49.8 in October just like in September, and still below the 50-threshold indicating contraction.
Even though the US and China have been sending positive signals about the impending “Phase 1” trade deal, markets have little hope that it will do enough to drive a turnaround in economic growth. China’s manufacturing sector is a major contributor to the economy and further contraction in the sector can only drive more economic weakness.
Most economists remain unconvinced that the interim trade deal would succeed in resolving key differences that caused the trade war in the first place. Markets anticipate trade tensions to continue for some time to come, and the “Phase 1” trade agreement to serve as a slight, temporary reprieve.
Another Reuters poll expects China’s GDP growth to slide to 6.2% this year and come in even lower at 5.9% in 2020. Although the Chinese government has rolled out stimulus measures to support the weakening economy, they have proved inadequate in the face of rising tariffs and weakening demand, both in the domestic and overseas sectors.
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