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China's manufacturing growth hits 14-month low as trade war bites – business live


An electric bus production line at a factory in Liaocheng in China’s eastern Shandong province.

An electric bus production line at a factory in Liaocheng in China’s eastern Shandong province. Photograph: STR/AFP/Getty Images

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Today we discover how the world’s manufacturers fared in August, in the face of trade war anxiety and worries over the global economy.

And the early signs aren’t good — growth in China’s manufacturing sector has slowed to its lowest level in over a year. Export orders shrank in August, for the fifth month in a row, and factory bosses cut staff.

Import costs also jumped sharply, as firms paid the price of the tit-for-tat tariffs imposed on some US goods entering China.

This dragged the Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) down to 50.6 in August from July’s 50.8.

That’s the weakest level since June 2017, and worryingly close to the 50-point mark that shows stagnation.

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China’s Caixin manufacturing PMI hit 14-month low https://t.co/2Gq8kFyLkO pic.twitter.com/DqLaCjNiiT


September 3, 2018

Although output did increase, new orders rose at the slowest rate since May 2017, as Caixin explains:


Latest data indicated that demand conditions softened, with total new business rising at the slowest pace for 15 months.

Weaker foreign demand contributed to the softer increase in overall new work, with export sales declining for the fifth month in a row.

China’s manufacturing PMI

Photograph: Caixin/Markit

This slowdown suggests that the tariffs imposed on Chinese goods by Washington this year, and the threat of further levies this autumn, are now hurting China’s economy.

Later today we learn how Europe’s factories performed. The UK manufacturing PMI is expected to dip a little to 53.9 from 54 in July. That would be a pretty solid performance.

Also coming up

Italy is on the radar after rating agency Fitch lowered its outlook on Italian debt to “negative” last week.

The country’s populist government has hit back, saying it will make a “historic choice” between what citizens need and what ratings agencies say should be done. That’s likely to leave investors on edge.

Argentina’s government is expected to announce sweeping spending cuts on Monday, in an attempt to tackle the currency crisis that had sent the peso plunging his year.

The pound may also come under pressure, after UK PM Theresa May (once again) ruled out a second Brexit referendum, and eurosceptic MPs attacked her Chequers plan.

Here’s the agenda

  • 9am BST: Eurozone manufacturing PMI for August
  • 9.30am BST: UK manufacturing PMI for August





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