Asian Factories Suffering From That Trade Tension

Forex News

Manufacturing activity in major Asian economies weakened after decline in exports orders, suggesting that the sector is already feeling the harm from trade tension between China and the U.S. According to surveys of purchasing managers, there are continuous pressure on key exporting targets like China, Japan and South Korea.

In China, manufacturing sector growth marked minimum of more than a year and export orders have been falling for 5th month. China's Caixin/Markit Manufacturing PMI dropped from 50.8 to 50.6. The data marked its yearly minimum. New export orders have contracted for the longest period since the first half of 2016. Zhengsheng Zhong, director of Macroeconomic Analysis at CEBM Group stated: "The manufacturing sector continued to weaken amid soft demand, even though the supply side was still stable," and: "China's economy is now facing relatively obvious downward pressure."

Japanese corporate capital expenditure growth hit its 12-year maximum in Q2. Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute in Japan warned: "The tit-for-tat tariff retaliation hurts China's economy far more than that of the United States. And when you look at Asia's economic prospects, much depends on whether China could avoid a sharp slowdown in growth”.

In South Korea, factory activity contracted for a 6th month straight after export orders declined for the first time in 3 months.

Asian countries are not the only ones that feel pressure from the trade friction. German industrial orders, for example, began easing as well.