China's factory activities have suddenly declined drastically in the month of May. This decline was the sharpest since 2022. The reason for this is believed to be America's strict tariff policy and increasing uncertainty in global trade.
Biggest drop in factory output in 20 months
According to the Caixin/S&P Global Manufacturing PMI survey, China's PMI fell to 48.3 in May from 50.4 in April. This figure has gone below 50 for the first time since september 2023. Let us tell you, PMI above 50 indicates growth and below 50 indicates decline.
Huge drop in export orders
Caixin said that the decline in new export orders was the highest since July 2023. That is, there has been a sharp decline in the demand for sending goods out of China. Total orders have also decreased, meaning there is a decline in demand both domestically and internationally.
Job crisis and slowdown in sales
The situation is also bad on the employment front. Employment has decreased for the second consecutive month and the sharpest decline has been seen since January. Also, the stock of finished goods with factories has started accumulating again after four months because sales have decreased and shipments are getting delayed.
Effect of tariff war, trump again showed strictness
US President donald trump had imposed tariffs of up to 145 percent on products imported from china in April, which have recently been stopped for 90 days. But its effect has already started showing. US tariffs are still at an average of 51.1 percent, while china has imposed 32.6 percent duty on US goods.
Why the difference between official and private data?
According to government PMI data, China's factory activity stood at 49.5 in May, which is slightly better, but still below growth. This data was taken at the end of the month, while Caixin's data was taken in the middle of the month, when the effect of tariff exemptions may not have fully taken effect..jpg)
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