Royston Carr Asset Management - China's factory activity expected to weaken this month as trade war continues to bruise China's economy.
Online PR News – 29-May-2019 – Taipei, Taiwan – Analysts at Royston Carr Asset Management say factory activity in China will likely shrink this month after slight growth for the past two consecutive months. Policymakers are facing growing pressure to increase stimulus measures to prop up the struggling economy.
China's economic woes have caused concern about global economic expansion and many central banks have made the call to downgrade growth forecasts and maintain easy monetary policy.
Royston Carr Asset Management analysts say the official Purchasing Managers' Index (PMI) is expected to come in at 49.9. This will be lower than April's reading of 50.1 and more importantly would be below the 50.0 mark that separates expansion from contraction.
Royston Carr Asset Management analysts say all eyes will be on China's factory output and domestic orders as economists try to gauge whether or not recent stimulus measures implemented by China's government have had any effect on the country's economic activity.
In spite of significant tax cuts and an increase in infrastructure spending China's economic data has been less than encouraging, apart from a brief pick up in March this year which economists had hoped hinted at economic stabilization.
But in April, China's exports dropped unexpectedly while industrial output and retails sales also weakened. The recent escalation of the trade war between the US and China will likely cause further weakening in China's economy as tit for tat tariffs and unwillingness to negotiate on both sides lessen the chances of a trade deal being reached.