The earliest indicators for China’s economy show that the pace of expansion slowed for a fourth month in August, highlighting the pressure for the government to push through pro-growth policies.
The data suggest the economy weakened further as demand from trading partners lost steam, with the decline in stock prices reflecting worsening sentiment. That’s according to a Bloomberg Economics gauge aggregating the earliest available indicators on business conditions and market sentiment.
Amid rising fears about a trade war, policy makers have unveiled measures to boost infrastructure construction and credit to smaller firms, as well as tax cuts. Such measures will take time to actually have an effect so the slowdown will probably continue, although analysts are looking at evidence of better sentiment in commodity markets.
The first official data for August, the purchasing managers index for manufacturing and non-manufacturing sectors, will be released Friday at 9 a.m. Both will decline slightly, according to economists surveyed by Bloomberg.
External demand is also less likely to support the economy. U.S tariffs will hit Chinese exports and in addition, there was a deterioration in the weighted average of the flash PMI readings of trade partners including the U.S., the European Union and Japan.
Sentiment worsened on the stock market as the benchmark Shanghai composite index tumbling 5.1 percent this month through Friday. Property developers were among the worst performers, as good sales data prompted worries that policy might be tightened for the sector.
Still, there are some signs of a silver lining. While the three-month weighted average of the Standard Chartered Plc index on small and medium enterprises indicates a weakening bias, the August reading rebounded to 56.6 from 55.7.
“Measures to boost SME loans since July seem to be having an effect,” according to a note from Shen Lan, the Beijing-based Standard Chartered economist in charge of the survey of more than 500 smaller companies. “Unclogging the monetary policy transmission mechanism and lowering borrowing costs for SMEs remain key to improving financial services for SMEs.”
China’s central bank has reduced the reserve requirement ratio three times this year, partly aiming at channeling funds to smaller companies who struggle to get credit. The performance of smaller exporters weakened amid the trade tensions, while domestically-focused companies strengthened, according to Shen.
With the government ramping up support for infrastructure spending, iron ore prices have rebounded. That pickup in sentiment was also reflected in the surveys Macquarie Securities Ltd. conducted with China-based producers and traders of steel and copper. They point to stabilized demand and better sentiment, according to Larry Hu, a Hong Kong-based economist at the bank.
“We could see infrastructure fixed-asset investment and credit growth bottom out this or next month,” Hu wrote in a note.
- Bill Gates Developing Vaccine That Spreads ‘Like a Virus’ To Vaccinate People Without Consent
- Democrats just screwed the whole country…
- If this kind of thing can happen in Duluth it can happen anywhere.
- A sea of red. Images show latest insider transactions. All either sales or option exercises. Not a single buy from insiders.
- Insurance CEO, Todd Callender says the real pandemic is NOW.
- Hedge funds are betting against bonds and stocks, net insider selling is higher than it’s been since January. Blackrock CEO selling shares like they are pennies. The 08 parallels are freaky
- Jim Quinn: ‘The average American is getting screwed harder than a monkeypox spreader at a San Francisco orgy’
- Green Energy – The Greatest Deception In Modern History
- Social Security payments: Millions of SSI recipients to get two checks worth up to $1,652 next month
- It is a totalitarian system: The FBI is raiding Mar-a-Lago and trying to criminalize opposition to the regime. NEVER in the history of the United States has the FBI ever carried out such a raid.