This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
China’s manufacturing sector stalled for the first time in over two years in November, lower than economists’ expectations as China remains embroiled in a scathing trade war with the United States (US).
The official manufacturing purchasing managers’ index (PMI) was at a score of 50.0 points, lower than the 50.2 points in October, data from the National Bureau of Statistics showed on Friday. Economists in a Reuters poll had expected PMI to come in at 50.2 points for the month.
A reading above 50 points indicates an expansion, while a reading below that shows that the sector is in a contractionary mode.
New export orders remained on contractionary mode but improved slightly, while the non-manufacturing index, an indicator that shows activity in the construction and services sectors, worsened from 53.9 points in October to 53.4 points in November.
The factory slowdown in November indicates effects of the US-China tariff war. October was the first full month after some US tariffs went into effect on September 24.
Make or break G20 summit: China and US trade standoff
China’s President Xi Jinping and US President Donald Trump are set to meet on the side lines of the G20 summit on Saturday. Days ago, Mr Trump had threatened to raise additional tariffs on China if talks go awry.
Wall Street has been hit by a state of uncertainty as traders factored in on a pause on further rate hikes and are cautious ahead of the G20 Summit talks which may change the course of trade between two of the world’s largest economies.
International Monetary Fund’s (IMF) chief Christine Lagarde has already stepped forward to state that the impact of trade tensions on global growth is causing worse than expected repercussions, calling the rise of trade barriers a “self-defeating” strategy “for all involved.”
Last month, the IMF said that the trade war escalation between the duo is likely to hit China harder than the US, and shaved the growth prediction for China next year to 6.2%, which will make it the slowest growth rate since 1990.
For the third quarter, China’s gross domestic product growth increased 6.5% on a year-on-year basis. The performance was slower than the second quarter, and the weakest pace since the first quarter of 2009.
The Chinese Yuan was ¥6.94 against the greenback on Friday morning.