China factory activity slows

Daily Analysis - 04/07/2016

China's manufacturing activity was weak but services improving


Official manufacturing PMI from China showed a slower pace of growth with the PMI indicator falling to 50 in June, compared to 50.1 in May. The Caixin manufacturing PMI also dropped, from 49.2 in May to 48.6 in June. Non-manufacturing PMI continued to rise from 53.1 in May to 53.7 in June showing strength in the economy's services and construction sector.

Japan consumer confidence rises in June

Consumer in Japan were more optimistic in June as the consumer confidence index among households rose 0.9 points to 41.80, data from the Cabinet office showed on Friday. However, the survey was conducted on June 15, before the Brexit referendum wrecked havoc in the global markets. The survey showed that consumers were positive in their economic outlook including employment and readiness to buy new durable goods. Last week, Japan's retail sales fell 2.30% marking a slowdown in consumer spending. The survey however showed that households expect inflation to rise in the year ahead. In a separate report, the BoJ’s measure of inflation showed that consumer prices increased 0.80% on the month in June, rising at the same pace as in May but below the BoJ’s inflation target of 2.0%


Eurozone manufacturing sector at 6-month high

Eurozone manufacturing sector showed signs of a recovery in June. Manufacturing PMI survey released by Markit on Friday showed that the Eurozone final manufacturing PMI rose more than expected to 52.8 in June. This was higher than 51.5 in May. The expansion in the manufacturing sector was the fastest growth in the Eurozone in nearly six months. The final manufacturing PMI also beat the flash manufacturing PMI released a week ago which showed that the manufacturing sector increased to 52.6. The manufacturing PMI survey was conducted prior to the announcement of the Brexit referendum and does not consider the implications from the outcome of the vote. Growth in the Eurozone came with Germany leading the way, while manufacturing grew a modest pace in Italy, Spain and Ireland. France manufacturing PMI showed a contraction, falling to 48.3 in June compared to 48.4 in May.


UK manufacturing PMI at a 5-month high

Manufacturing PMI data from the UK showed a modest improvement in the sector. Data from Markit/CIPS on Friday showed that the UK's manufacturing PMI jumped to 52.1 following a revised print of 50.4 in May. The June manufacturing PMI reading marks the highest increase since January this year. Still, the PMI data does not reflect the sector sentiment as the survey was conducted prior to the June 23 referendum vote. Growth of output and new orders in the manufacturing sector gather pace with employment falling for the sixth straight month. The PMI survey showed that both input and output costs increased, signaling inflation on the producer side. UK's manufacturing PMI briefly fell into contraction, slipping below the 50-reading in April to 49.4.


US manufacturing rises in June

Manufacturing activity in the US registered growth in the sector, rising for the fourth consecutive month in June. The Institute for Supply Management, ISM's report on the manufacturing sector released on Friday showed that the index jumped 53.2 in June, compared to 51.3 in May, indicating continued expansion in the sector. This was well above the median forecasts of 51.50. The increase in the headline manufacturing index was due to accelerated growth in the production with the production index rising to 54.7 in June from 52.6 in May. New orders index also increased from 55.7 in May to 57.0 in June.


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