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Asian factories suffering, more stimulus seen ahead

Purchasing Managers’ Indexes showed manufacturing activity contracting in China for a second consecutive month,while export driven economies in North Asia – Japan, South Korea and Taiwan – have been in pain for longer.

The Bank of Japan and the European Central Bank have flagged their readiness to ease policy in the past week, despite having far less room than the Fed to do so. The readings were largely in line with an official gauge that showed factory activity last month shrank at a slower-than-expected pace. The White House and China’s Commerce Ministry each described the meetings in Shanghai as constructive, but neither announced any agreements or goodwill gestures that might have cleared the path to more substantive future talks.Many economists say any escalation could lead to a global recession. “We expect that this downward trend in manufacturing will continue in 2019 until the trade and technology negotiations make some progress,” said Iris Pang, Greater China economist at ING.

 

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