Daily Insight
Group Economics Macro & Financial Markets Research
3 May 2016
Global manufacturing still lacklustre Maritza Cabezas Senior Economist
weak global demand
Tel: +31 20 343 5618 maritza.cabezas@nl.abnamro.com
Tel: +31 20 343 5606 aline.schuiling@nl.abnamro.com
US manufacturing weakened, while eurozone’s manufacturing PMI was revised slightly higher, but remains at subdued levels
Aline Schuiling Senior Economist
April’s manufacturing surveys show that factories continue to struggle with
China’s official manufacturing PMI edged down, but continues to show signs of stabilisation
April’s manufacturing surveys show that factories continue to struggle Manufacturing PMIs released since Sunday are showing that, although in the US, eurozone and China the indexes remain above the 50-point level - indicating expansion of production weak global demand is preventing a firm recovery. We think that global economic growth will gradually improve in 2016, but will still be sub-trend. The US and eurozone economies will likely recover. Meanwhile, China’s economic slowdown is likely to remain gradual, given that authorities are committed to support the economy.
Manufacturing surveys still lacklustre index
60
50
40 10
11 US ISM
12
13
eurozone PMI
Source: Thomson Reuters Datastream
Insights.abnamro.nl/en
14
15
China PMI (official)
16
2
Daily Insight – Global manufacturing still lacklustre– 3 May 2016
US ISM manufacturing index declines, but continues to signal expansion The ISM manufacturing index declined by 1ppt in April to 50.8, but continues to show signs of expansion. The impact of weak global demand, and a stronger US dollar have continued to affect manufacturing activity in the US. Meanwhile, although oil prices are recovering, the US energy sector continues to struggle. However, most details of the report remain solid. The employment index, one of the components, saw some improvement compared to the previous month (49.2 was 48.1), while export orders increased 0.5pts to 52.5 in April. Looking forward, we expect that a weaker US dollar and an easing in financial conditions will support the recovery of the US economy in the coming quarters. Eurozone manufacturing PMI signals modest expansion in the sector The eurozone manufacturing PMI for April was revised higher to 51.7, up from an initial estimate of 51.5. Thanks to the upward revision it turned out slightly higher in April than in March (51.6). Nevertheless, the index has remained below the levels of close to 53 that it reached during the final months of last year. This signals that the underlying growth rate of the industrial sector remains modest. Indeed, we expect that the combination of a stronger euro and slow global growth will weigh on exports and industrial production in the coming quarters. The details of April’s manufacturing PMI gave some evidence for this view, with the incoming new export orders significantly below the incoming total new orders. China’s official PMI continues to show signs of stabilisation China’s official PMI, which mainly surveys state-owned factories, edged down to 50.1 in April from 50.2 the previous month. However, this is still 0.6pts higher than the average in Q1 (49.5). Moreover, this is the second month of expansion (above the 50-point level), contrasting with seven consecutive months of contraction previously. April’s PMI is still consistent with an economy that will likely improve in Q2. At the same time the official non-manufacturing PMI fell slightly to 53.5 from 53.8. We think that China’s authorities will continue to have a difficult task in stabilising the economy and preserving financial stability. However, stimulus measures are already contributing to near-term growth and financial market stabilisation, which has helped ease the fears of a hard landing. Our base case scenario remains that of an ongoing gradual, although bumpy slowdown, on the back of ongoing fiscal and monetary stimulus.
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Daily Insight – Global manufacturing still lacklustre – 3 May 2016
Day
Date
Time
Country
Key Economic Indicators and Events
Period
Latest outcome
Consensus
Sunday Sunday
01/05/2016 01/05/2016
03:00:00 03:00:00
CN CN
PMI manufacturing - index (official) PMI non-manufacturing - index (official)
Apr Apr
50.1 53.5
50.3
Monday Monday Monday Monday
02/05/2016 02/05/2016 02/05/2016 02/05/2016
09:00:00 10:00:00 15:45:00 16:00:00
NE EC US US
PMI PMI manufacturing - index Markit - Flash PMI ISM manufacturing - index
Apr Apr F Apr F Apr
52.6 51.7 50.8 50.8
Tuesday Tuesday Tuesday
03/05/2016 03/05/2016 03/05/2016
03:45:00 03:45:00 10:30:00
CN CN GB
PMI manufacturing - index (Caixin) PMI services - index (Caixin) PMI manufacturing - index
Apr Apr Apr
49.7 52.2 51.0
49.8
Wednesday Wednesday Wednesday Wednesday Wednesday Wednesday Wednesday Wednesday
04/05/2016 04/05/2016 04/05/2016 04/05/2016 04/05/2016 04/05/2016 04/05/2016 04/05/2016
10:00:00 10:00:00 11:00:00 14:15:00 14:30:00 14:30:00 16:00:00 16:00:00
EC EC EC US US US US US
Composite PMI output PMI services - index Retail sales - % mom ADP nat. employment report - thousands Trade balance - USD bn Output per hour nonfarm business sector - % qoq ISM non-manufacturing, index New durable goods orders - % mom
Apr F Apr F Mar Apr Mar 1Q P Apr Mar F
53.0 53.2 0.2 200 -47.1 -2.2 54.5 0.8
53.0 53.2 -0.1 190 -44.6 -1.3 54.8
55.0
Thursday Thursday Thursday Thursday
05/05/2016 05/05/2016 05/05/2016 05/05/2016
10:30:00 13:00:00 14:30:00 20:00:00
GB CZ US MX
PMI services - index Repo rate - % Initial jobless claims - thousands Policy rate - %
Apr May 5 Apr 30 May 5
53.7 0.05 257 3.75
53.5 0.05
0.05
Friday Friday Friday Friday Friday Friday
06/05/2016 06/05/2016 06/05/2016 06/05/2016 06/05/2016 06/05/2016
09:00:00 14:30:00 14:30:00 14:30:00 21:00:00
CH US US US US PL
Foreign currency reserves - CHF mln Change in employment private employment - thousands Change in employment total - thousands Unemployment - % Fed Reserve consumer credit - USD bn Reference rate - %
Apr Apr Apr Apr Mar May 6
575831 195 215 5.0 17.2 1.5
ABN AMRO
53.7 51.5 51.3
51.0
51.2
185
3.75
193 202 5.0 16.2 1.5
185 195 5.0 1.5
Source: Bloomberg, Reuters, ABN AMRO Group Economics (we provide own forecasts only for selected k ey variables and events)
Find out more about Group Economics at: https://insights.abnamro.nl/en/
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