Eco Pulse

China: Moderate slowdown in exports and fiscal support

07/08/2025
PDF
Business climate: PMIs

Trade truce. The official PMI for the manufacturing sector has been in contraction territory since April, mainly due to the US-China trade war and worsening export prospects. However, the index rose slightly from 49 to 49.5 in May and 49.7 in June, following the agreement reached between Washington and Beijing (after discussions in London in early May and in Geneva in early June). The Caixin manufacturing PMI even rose above 50 in June (vs. 48.3 in May). In the services sector, the official PMI has been close to 50.3 for the past three months.

Households: Retail sales and consumer confidence

Household consumption is supported by government subsidies. Retail sales growth picked up again in May (+6.5% y/y in volume terms, vs. +5.2% in April), boosted by government subsidies for the replacement of consumer goods. However, housing sales continued to contract (-5.5% y/y in April) and consumer confidence remains fragile.

Labour market: Activity and unemployment rate

The slowdown in industrial growth is expected to weigh on the labour market. The unemployment rate continued to decline slightly in May (to 5.0%). However, the average number of hours worked declined slightly in the first five months of 2025. Labour market conditions are expected to deteriorate in the short term given the slowdown in industrial activity.

Inflation and monetary policy

Monetary and fiscal easing. The CPI index continued to fall in May (-0.1% y/y, for the third consecutive month) and core inflation reached +0.6% (vs. +0.5% in April). Producer prices fell by -3.3% y/y in May, the sharpest decline since Q3 2023. Despite new monetary easing measures, growth in outstanding bank loans continued to slow in May (+7.0% y/y vs. +7.4% six months earlier). Growth in bond financing remained solid, supported by Treasury and local government bond issuance.

Real GDP growth q/q : actual, carry-over, forecasts

Economic slowdown in Q2. Real GDP growth is expected to be +0.8% q/q in Q2 2025, down from +1.2% q/q in Q1. The economic growth slowdown is driven by a slowdown in export growth (+4.8% y/y in USD in May, vs. +8% in April), which remains moderate, however, and is partially offset by stronger domestic demand.

Article completed on 2 July 2025

THE ECONOMISTS WHO PARTICIPATED IN THIS ARTICLE

Other articles from the same publication

Global
Ecopulse | July 2025

Ecopulse | July 2025

Our Q2 2025 nowcasts highlight the resilience of the Eurozone and, to a lesser extent, France. Weaker exports (after their surge in Q1 in anticipation of the US trade tariffs) penalises our forecast in Q2 [...]

Read the article
Eurozone
Eurozone: Indicators stable, inflation under control

Eurozone: Indicators stable, inflation under control

The composite PMI index was stable at 50.2 in June, remaining above the expansion threshold in the first half of the year. The upturn in the manufacturing index slowed but continued (+0.1 pt to 49.5) [...]

Read the article
Eurozone
Credit in the Eurozone: Slowdown in corporate lending, acceleration in household lending

Credit in the Eurozone: Slowdown in corporate lending, acceleration in household lending

The decline in borrowing rates in the Eurozone resumed, except for investment loans. New investment loan rates (IRF > 5 years) to non-financial corporations in the eurozone remained stable in May 2025, at 3.67%, for the third consecutive month [...]

Read the article
Germany
Germany: economic recovery continues

Germany: economic recovery continues

The IFO business climate continues to improve (+0.9 points in June compared to the previous month, to 88.4), supported by favourable economic prospects [...]

Read the article
France
France: Decline in private sector confidence

France: Decline in private sector confidence

Business climate: improvement confirmed in construction. The business climate continues to be quite low, with 96 in June and in May (97 in March-April) [...]

Read the article
Italy
Italy: Business climate on the rise, household confidence down

Italy: Business climate on the rise, household confidence down

Business climate: the improvement continues. The economic sentiment index has been improving for two months, reaching 98.6 in June (+0.2 points m/m) [...]

Read the article
Spain
Spain: Economic momentum remains strong

Spain: Economic momentum remains strong

Business climate: favourable, but slightly weaker. In June, the economic sentiment index remained above its long-term average and that of the Eurozone, but weakened for the second consecutive month (102; -1.4 points m/m) [...]

Read the article
United Kingdom
United Kingdom: Surveys show improvement, but employment stalls

United Kingdom: Surveys show improvement, but employment stalls

Business sentiment improves in all sectors: The composite PMI index rises in June (+1.7 points, to 52), driven by both services (+1.9 points, to 52.8) and industry (+1.3 points, to 47.7) [...]

Read the article
United States
United States: Improvement in the Business Climate

United States: Improvement in the Business Climate

Improvement in the ISM. The manufacturing ISM improved modestly (49.0, +0.5 pp) in June, with a notable jump in output (50.3, +4.9 pp), which entered expansion territory for the first time since February [...]

Read the article
Japan
Japan: Improvement in the Business Climate

Japan: Improvement in the Business Climate

Favourable developments for the business climate. The manufacturing PMI stood at 50.1 in June (+0.7 pp, the first expansion posted since May 2024) thanks to growth in output (51.2, +2.5 pp). The services sector also improved (51.7, +0.7 pp) [...]

Read the article