China's dropping factory gate prices suggest broader economic slowdown

China's dropping factory gate prices suggest broader economic slowdown

In May, China's producer price inflation went down for the third straight month on sliding prices of raw materials, indicating a broader decline in economic activity as revenues are squeezed by slackening domestic demand as well as soaring financing costs.

Descending factory gate inflation in the world's number two economy could appear to be be a further concern for global major banks such as the Fed and ECB, both puzzling over why domestic prices have been still sluggish notwithstanding improving economic surge.

In May, China's producer price index jumped 5.5% from the previous year, as the National Bureau of Statistics informed on Friday, unlike an expected revenue of 5.7 percent and also slower than April’s 6.4% soar.

A renaissance in the country’s steel industry has been a powerful driver of the world's number two economy for recent quarters, assisting to generate the strongest revenue surge in years and also contributing to a reflationary pulse in the global manufacturing sector.

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