The Official NBS Manufacturing PMI in China dropped to 49.5 in August 2019 from 49.7 in the previous month and below market expectations of 49.7. The latest reading pointed to the fourth straight month of contraction in factory activity, amid growing trade frictions with the US and sluggish domestic demand. There were falls in new orders (49.7 vs 49.8 in July) and employment (46.9 vs 47.1), while output growth slowed (51.9 vs 52.1). Export orders were down for the 15th straight month (47.2 vs 46.9) while buying level declined at the steepest rate since February (49.3 vs 50.4). On the price front, input prices dropped the most in seven months (48.6 vs 50.7), while output charges fell for the fourth month in a row (46.7 vs 46.9). Looking ahead, business sentiment weakened to its lowest since January (53.3 vs 53.6). Business Confidence in China averaged 51.82 Index Points from 2005 until 2019, reaching an all time high of 59.20 Index Points in April of 2008 and a record low of 38.80 Index Points in November of 2008.
Business Confidence in China is expected to be 49.90 Index Points by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate Business Confidence in China to stand at 50.50 in 12 months time. In the long-term, the China NBS Manufacturing PMI is projected to trend around 51.00 Index Points in 2020, according to our econometric models.