Global daily insight 2october 2015

Page 1

Daily Insight China drags global manufacturing

Group Economics Macro & Financial Markets Research Arjen van Dijkhuizen, Maritza Cabezas & Aline Schuiling +31 20 343 5616

2 October 2015   

China’s manufacturing PMIs still below 50 but stabilising, while divergence in Services PMIs widens US manufacturing at slowest pace in two years Slowdown in eurozone manufacturing limited by robust domestic demand

Chinese Manufacturing PMIs still below 50, but stabilising

US manufacturing at slowest pace in two years

China’s PMI data for September published on Thursday

September’s US manufacturing expanded at the slowest pace

showed a mixed picture. Caixin’s Manufacturing PMI came in

in two years. The ISM declined to 50.2 from 51.1 in August.

at 47.2, a touch better than the flash number (and consensus

This confirms the tepid growth of a sector that is being

forecast) of 47 and just below the August reading of 47.3. Still,

severely hit by a strong dollar and the negative impact from

this index is at its lowest level since March 2009, confirming

declining investments in the energy and mining sectors. Indeed

the weakness in China’s industry, which is faced with

the weakness was widespread. Forward looking indicators,

overcapacity and subdued domestic and external demand. In

including new orders decreased by 1.6ppts from 51.7 in

contrast, NBS’ Manufacturing PMI rose marginally to 49.8

August. The uncertainty in the global economy, maintained

(consensus 49.7, in line with the August figure). The NBS

new export orders unchanged at 46.5. Meanwhile, the

index includes the larger (state) enterprises that more directly

employment index fell to 50.5 from 51.2 the previous month.

feel the support of the government’s general easing measures.

Most manufacturing related data has been pointing to weakness, in contrast to the other US economic data which

Caixin’s Services PMI at 14-month low, NBS’s solid at 53.4

remains strong. We think that US manufacturing activity will

Caixin’s Services PMI fell to a 14-month low of 50.5 (August:

remain subdued in the coming time.

51.5), although remaining above the neutral 50 mark. Still, the employment sub-index improved, illustrating the strength of the

Eurozone manufacturing also slowing down

services sector in creating jobs. However, Caixin’s composite

The final estimate of eurozone manufacturing PMI was

output index reached the lowest level since 2009. Meanwhile,

unchanged from the flash estimate; a decline to 52.0 in

NBS’ non-manufacturing PMI was more resilient, staying at a

September from 52.3 in August. Although at its current level

solid 53.4. All in all, while services continue to hold better than

the PMI is still consistent with expansion of the industrial

industry, there is a risk that the weakness broadens. We still

sector, it suggest the sector has lost some momentum. Indeed,

expect the government to add monetary and fiscal stimulus to

the details of the report reveal that the new export orders

keep China’s slowdown gradual. The government has for

component fell in September (to 52.1, down from 52.6 ), while

instance just halved the sales tax on small cars.

the orders-to-stocks ratio edged lower to 1.08 from 1.10. That said, the eurozone’s industrial sector is being supported by the

China’s manufacturing PMIs point to stabilisation

weak euro and the strength of domestic demand, which is compensating part of the slowdown in foreign demand. Indeed,

index

60

the total orders component fell only marginally in September,

58

despite the decline in export orders. The same picture was

56

painted by Germany’s factory orders for August, which were

54

published earlier. Total orders fell by 1.4% mom, with domestic

52

orders rising by 4.1%, orders from other eurozone countries

50

rising by 2.2% and orders from the rest of the world dropping by 9.5%.

48 46 11

12 13 Caixin Manufacturing PMI NBS Manufacturing PMI

Source: Thomson Reuters Datastream

14 15 Caixin Services PMI NBS Non-manufacturing PMI


2

China drags global manufacturing – 2 October 2015

Financial markets Currency markets

Close

Change 1 day

Change 5 days

Change YTD

EUR/USD USD/JPY

1.1174

0.4495

-1.1937

-7.6529

120.49

0.4334

-0.1492

0.5424

AUD/USD

0.7034

-0.5936

-2.1152

-13.8518

USD/CHF

0.9747

0.1233

0.7026

-1.9318

NZD/USD

0.6270

-0.2704

-1.3220

-19.5638

GBP/USD

1.5252

-0.7871

-1.4920

-2.1115

USD/SGD

1.4253

0.4865

2.0477

7.6023

USD/CAD

1.3286

0.0753

0.8502

14.3866

Bond markets

Close

Change 1 day

Change 5 days

Change YTD

2-year German Govt Bond yield

-0.2470

0.0150

-0.0270

-0.1490

10-year German Govt Bond yield

0.6170

0.0270

-0.1570

0.0760

Yield curve Germany

0.8640

0.0120

-0.1300

0.2250

2-year US Treasury Bond yield

0.7032

0.0294

-0.1076

0.0387

10-year US Treasury Bond yield

2.1657

0.0320

-0.1283

-0.0055

Yield curve US

1.4625

0.0026

-0.0207

-0.0442

US 2-year sw ap rate

0.8023

0.0169

-0.1003

-0.0920

US 10-year sw ap rate

2.1665

0.0362

-0.1258

-0.1196

US sw ap curve

1.3642

0.0193

-0.0255

-0.0276

EU 2-year sw ap rate

0.0560

0.0080

-0.0235

-0.1190

EU 10-year sw ap rate

0.9870

0.0230

-0.1140

0.1750

EU sw ap curve

0.9310

0.0150

-0.0905

0.2940

-0.0390

0.0000

-0.0020

-0.1170

0.3260

0.0068

-0.0095

0.0704

18.6800

18.9500

35.5500

Euribor 3 Month ACT/360 ICE LIBOR USD 3 Month JPMorgan EMBI Plus Sovereign S

422.9900

Equity markets

Close

Change 1 day % Change 5 days %Change YTD%

Nikkei 225

18,070

-1.96

-1.06

3.55

Hang Seng Index

21,303

-2.26

-3.02

-9.75

Hang Seng China Enterprises Index

9,570

-2.70

-3.38

-20.15

Australian Stock Exchange S&P/ASX 200 Index

4,998

-2.07

-1.98

-7.63

Singapore Straits Times Index

2,846

-0.79

-0.80

-15.43

Euro Stoxx 50 Index

3,095

0.60

-4.83

-1.65

S&P 500 Index

1,942

-0.01

-2.65

-5.65

MSCI World Daily Total Return Gross USD

725

-1.65

-1.80

-5.55

AEX Index

421

0.29

-3.95

-0.77

-0.85

4.22

15.89

Chicago Board Options Exchange Volatility Index

Commodity markets Reuters/Jefferies CRB Total Return

22

Close

Change 1 day % Change 5 days %Change YTD%

195

-1.03

-2.09

-15.26

1,132

0.63

1.10

-4.48

Generic first NYMEX Crude Light future

47

0.54

-1.15

-12.50

Generic first Brent Crude Oil future

50

0.94

-0.42

-13.59

5,088

0.20

-5.41

-19.24

503

1.56

3.07

-14.67

Gold spot USD/Oz

LME Copper 3 Months Rolling Forw ard Generic first Wheat future Chicago Board of Trade Source: Bloomberg


3

China drags global manufacturing – 2 October 2015

Day

Date

Time

Country

Key Economic Indicators and Events

Period

Latest outcome

Consensus

Monday Monday Monday Monday Monday

28/09/2015 28/09/2015 28/09/2015 28/09/2015 28/09/2015

. 14:30:00 14:30:00 15:45:00 16:00:00

CH US US EC US

Total Sight Deposits bn PCE deflator core - % mom PCE deflator core - % yoy ECB announces weekly QE details Pending home sales - % mom

Aug Aug

495 0.1 1.2

0.1 1.3

Aug

0.5

0.3

0.4

Tuesday Tuesday Tuesday Tuesday Tuesday

29/09/2015 29/09/2015 29/09/2015 29/09/2015 29/09/2015

07:30:00 11:00:00 14:00:00 15:00:00 16:00:00

IN EC DE US US

Repo rate - % Economic sentiment monitor - index CPI - % yoy S&P/Case Shiller house price index Conference Board cons. confidence - index

Sep 29 Sep Sep P Jul Sep

7.3 104.2 0.2 -0.1 101.5

7.0 104.1 0.0 0.1 96.1

104.3 0.0 0.2 96

Wednesday Wednesday Wednesday Wednesday Wednesday Wednesday Wednesday Wednesday Wednesday

30/09/2015 30/09/2015 30/09/2015 30/09/2015 30/09/2015 30/09/2015 30/09/2015 30/09/2015 30/09/2015

01:50:00 09:55:00 09:55:00 10:30:00 11:00:00 11:00:00 11:00:00 14:15:00 15:45:00

JP DE DE GB EC EC EC US US

Industrial production - % mom Unemployment - % Unemployment change - thousands GDP - % qoq Core inflation - % yoy CPI - % yoy Unemployment - % ADP nat. employment report - thousands Chicago Fed - business confidence - index

Aug P Sep Sep 2Q F Sep A Sep Aug Sep Sep

-0.8 6.4 -7.0 0.7 0.9 0.1 10.9 190.3 54.40

0.9 6.4 -4.3 0.7 0.9 0.0 10.9 183.6 53.20

0.9 -0.1 10.9 180.0 52.0

Thursday Thursday Thursday Thursday Thursday Thursday Thursday Thursday Thursday

01/10/2015 01/10/2015 01/10/2015 01/10/2015 01/10/2015 01/10/2015 01/10/2015 01/10/2015 01/10/2015

01:50:00 03:00:00 03:45:00 10:00:00 10:30:00 14:30:00 15:45:00 16:00:00

JP CN CN EC GB US US US RU

Tankan business conditions large enterprises PMI manufacturing - index (official) PMI manufacturing - index (HSBC) - flash PMI manufacturing - index PMI manufacturing - index Initial jobless claims - thousands Markit - Flash PMI ISM manufacturing - index GDP - % yoy

3Q Sep Sep F Sep F Sep Sep 25 Sep F Sep 2Q F

15.0 49.7 47.0 52.0 51.5 267.0 53.0 51.1 -4.6

13.0 49.6 47.1 52.0 51.4

50.7 -4.6

50 -4.6

Friday Friday Friday Friday

02/10/2015 02/10/2015 02/10/2015 02/10/2015

01:30:00 14:30:00 14:30:00 14:30:00

JP US US US

Unemployment - % Change in employment private employment - thousands Change in employment total - thousands Unemployment - %

Aug Sep Sep Sep

3.3 140.0 173.0 5.1

3.3 195.0 201.0 5.1

190 195 5.1

ABN AMRO

Source: Bloomberg, Reuters, ABN AMRO Group Economics (we provide own forecasts only for selected k ey variables and events)

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