Interest Rates And Chinese Manufacturing Industry

Factories in Asia are not showing much signs of recovering last month because of the sluggish activity that has hit the biggest economies in the region which is Japan and China. It shows that the demand continues to come in an irregular manner at the very best despite the actions of the global policy makers to regain their momentum.

The United States posted the slow activity involved in the growth of their second quarter, a week later it was Asia that posted its uninspiring survey regarding the manufacturing industry in the region. The published survey has the capacity to affect the decision that the chairman of the Federal Reserve made during the Federal meeting which was held last September 20 to 21. The decision is whether they need to raise the current interest rates or not.

Furthermore, there is the hanging issue of the unknown impact of the decision of Britain last June to leave the European Union which has affected the consumption. As a result, factories are now having a hard time selling out their goods.

In the case of China which is considered to have the second biggest economy in the world, the activities in factories show very minimal growth.

According to the PMI or Purchasing Managers’ Index, the previous months recorded to be at 49.9 and it was only last month that it increased a little bit and recorded 50.4. There is a very little difference considering that 50 is the point mark that is separating the state of growth from the state of contraction.

According to the PMI of Caixin which is a private version since it covers mainly the growth of smaller businesses, the recorded index for last month was only 50.0 while it was still at 50.6 during the month of July.

According to CEBM Group’s director of macroeconomic analysis, Zhengsheng Zhong, there is a continued downward pressure that is pressing the economy of China thus it is important that the government should provide the necessary support to stabilize the growth.

Despite the stagnant growth, China still continues to manufacture industrial equipment such as diamond saw blades and market it in other countries for further profit.

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