The slowdown in China's industry continues despite the trade relationship between China and the US – the world's two largest economies – having stabilized with an extended pause for increased tariffs on Chinese goods from the Trump administration until the beginning of November.
Worse than expected
The August outcome was worse than expected. Analysts had expected a clearer path towards growth in China's industry. The average forecast was for an increase in the industry's purchasing managers' index to 49.5, up from 49.3 in July.
The construction and service sectors are simultaneously increasing their activity level slightly, with an index reading of 50.3 – up from 50.1 in July.
Extreme weather has affected the construction sector and the tourism industry in China, while the housing market continues to decline.
Threatened by tariffs
China's economy is still threatened by tariffs from the US, where President Donald Trump has threatened to introduce 200-percent tariffs on Chinese goods if China does not deliver rare earth metals to the US – critical raw materials for everything from electric cars to weapons.
There is also a risk that China's exports to Mexico will decline in the future, since the government there has presented plans for tariffs on Chinese goods after pressure from the US.
On Monday, the purchasing managers' index for August is also expected from Swedish industry, as well as the corresponding index from all major economies in the world.
