Chinese factories pay more for materials, sell finished goods for less
What happened
Chinese industrial producers are paying significantly more for raw materials and energy. But they are selling their finished goods, especially consumer products, for less money.
Why it matters
Chinese factories are caught in a squeeze. Their input costs are rising, but they cannot pass those costs on to consumers. This means shrinking profit margins for manufacturers, particularly those making everyday goods.
The signal
Watch for factory closures or shifts in production capacity as manufacturers struggle to maintain profitability.