Asian factories slow in July

HONG KONG (Reuters) — Manufacturing activity across Asia slowed in July, deepening concerns about the region’s economic outlook as an intensifying trade conflict between the US and China sent shudders through their trading partners.

A survey of purchasing managers released yesterday showed China’s manufacturing sector grew at its slowest pace in eight months in July, with new export orders suffering the worst slump since mid-2016.

Similar surveys revealed slowing activity from Australia to Japan. The shipping container market, in which the vast majority of finished manufacturing goods are imported and exported, shows a similar picture: the Harpex container index has fallen by 10 percent from its highest levels since 2011 hit in June.

Factory activity in the euro zone, where tariff threats were on hold, was expected to keep up the pace. In the US it was seen cooling slightly, but still strong enough for the Federal Reserve to stay on track for two rate hikes this year even if it was likely to hold rates steady this week.

Last month, China and the US slapped tit-for-tat tariffs on $34 billion of each other’s goods and another round of tariffs on $16 billion is expected in August.

US President Donald Trump’s administration, according to a source familiar with its plans, is poised to propose 25 percent tariffs on a further $200 billion of imports, up from an initial proposal of 10 percent, and a threat of tariffs on the entire $500 billion-or-so goods imported from China still stands.

Beijing has pledged equal retaliation, although it only imports about $130 billion of US goods.

China’s Caixin/Markit Manufacturing Purchasing Managers’ index (PMI) dropped to 50.8 from June’s 51, broadly in line with an official survey on Tuesday.