The economic landscape in early 2025 is seeing significant shifts due to recent policy changes, particularly President Donald Trump's confirmation of 25% import tariffs on Canada and Mexico. These changes have resulted in a noticeable dip in market performance, affecting trade dynamics across North America. Moreover, the imposition of additional tariffs on all imports from China since early February has further compounded the situation, impacting both export and import growth.
In February, the official manufacturing Purchasing Managers' Index (PMI) rebounded to 50.2 from January's 49.1, as activity picked up following the Lunar New Year holidays. The average new orders and production PMIs for the first two months of 2025 stood at 50.2 and 51.2, respectively, suggesting steady manufacturing activity. Consequently, industrial production (IP) growth is expected to remain resilient at 5.0% year-on-year during this period.
"The official manufacturing PMI rebounded to 50.2 in February from 49.1 in January after the Lunar New Year holidays. The average new orders and production PMIs for 2M-2025 were 50.2 and 51.2, respectively, indicating steady manufacturing activity. We therefore expect industrial production (IP) growth to have stayed resilient at 5.0% y/y over the period. Expansion of the equipment upgrade and consumer goods trade-in programmes likely supported fixed asset investment (FAI) and retail sales growth." – Standard Chartered's economists
The expansion of equipment upgrades and consumer goods trade-in programs have likely bolstered fixed asset investment (FAI) and retail sales growth, despite the challenges posed by the new tariffs. Retail sales and FAI growth are anticipated to edge up, supported by policy measures, though industrial production growth might have moderated slightly.
The financial sector also exhibits stability despite market fluctuations. Total social financing (TSF) outstanding growth likely edged up 0.4 percentage points to 8.4% year-on-year in February, while new CNY loan growth remained stable at 7.5% year-on-year. Government bond financing continued to be substantial, aiding project financing efforts across various sectors.
"We expect total social financing (TSF) outstanding growth to have edged up 0.4ppt to 8.4% y/y in February. New CNY loan growth likely remained stable at 7.5% y/y. In addition, government bond financing remained sizeable to support project financing." – Standard Chartered's economists
Despite these developments, the overall economic performance in early 2025 has been weighed down by the dual impact of holiday seasons and tariff implementations. The trade performance likely weakened last month as these factors compounded, leading to a less dynamic market environment.
"The US has imposed additional tariffs on all of its imports from China since early February to date. We expect 2M-2025 trade activity to have been affected, with export growth slowing and import growth turning negative over the period. CPI inflation likely fell to -0.6% y/y in February due to a high base and a decline in food, services and fuel prices. Meanwhile, PPI deflation may have moderated on higher metal and construction material prices." – Standard Chartered's economists
Consumer Price Index (CPI) inflation is estimated to have fallen to -0.6% year-on-year in February, influenced by a high base effect and decreases in food, services, and fuel prices. Meanwhile, Producer Price Index (PPI) deflation may have moderated amid rising metal and construction material prices.
This article, sponsored by a broker for trading EUR/USD in 2025, serves as an analysis of current economic trends rather than specific investment advice. It should be noted that neither the author nor FXStreet are registered investment advisors.