Amid the worsening trade ties between China and the United States, manufacturing gauge of the United States from the Institute for Supply Management showed a fall in the sector in August, the first decline for it since 2016. The slump has further triggered a downfall of stocks and yields and has also catalyzed the possible interest-rate cuts. Globally, manufacturing sector has been taking a hit due to the trade war and Brexit, but there are hardly any solutions apparently visible in the near future.
As per the data released by the Institute for Supply Management on Tuesday, the purchasing managers index (PMI) stumbled below 50 at 49.1 in August, way below the expectations forecasted by economists in the Wall Street. A PMI of below 50 indicates that the manufacturing sector is shrinking. The measure of new orders, according to the report, fell to the lowest in seven years, while the production index was at its lowest in almost four years. The data points towards a major upcoming recession in the United States while underlining the failure of Donald Trump’s government to address the limping manufacturing sector. Instead of improving the sector, Trump’s take on trade with China has only worsened the situation further as factory weakness is now threatening to impact consumer spending as well.
As far as the Chinese market is concerned, Chinese stocks surprisingly ended up on the positive side as Yuan slumped to its record low. China’s stock exchange market, the Shanghai Composite Index (SHCOMP) closed 0.2 per cent up at 2930.15, which was its highest closing since July 31. Despite the fragility in global market, China’s manufacturing unit reached the highest point in five months as improvements promise better days for the Chinese market in the near future. The other Asian markets, including Hong Kong, Japan, and South Korea ended up with a low.