US-China trade tensions are causing an “oversupply of manufactured goods” and weaker demand, according to independent research provider TS Lombard.
“On the supply side, Chinese firms facing existing tariffs and fearing escalation, have aggressively reoriented spare capacity to production for domestic markets. The result is a glut in manufactured goods, particularly consumer durables, which is weighing on prices,” TS Lombard’s Rory Green and Bo Zhuang said in a research note on Thursday. “Consumer durable [producer price index] is the lowest since 2006. Excess supply comes at a time when a trade war induced fall in consumer confidence means households are reluctant to ramp up spending even with lower prices.”
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