China’s credit rating downgraded to negative

Daily Analysis - 01/04/2016

Ratings agency Standard&Poors downgraded China from Stable to Negative


Citing concerns that the shift in the Chinese economy from manufacturing to services could take longer than anticipated, credit ratings agency Standard&Poors downgraded the credit rating for the world's second largest economy from Stable to Negative.

French preliminary CPI in March increased 0.30%

French preliminary CPI estimates showed an increase of 0.70%, matching forecasts for March but on an annualized basis, French inflation fell 0.20%, missing forecasts of a decline of 0.10%, data from Insee showed. French consumer spending increased 0.60% for the month with previous month’s data revised higher from 0.60% to 1.0%. French producer price index fell 0.50% in March and contracting 4.10% on a year over year basis. Data from France has been mixed. Last week, French flash PMI manufacturing was softer than expected, rising to 49.6, down from February's 50.2, but flash PMI services was stronger, rising from February's 49.2 to 51.2 in March indicating that the services sector was expanding. French flash composite PMI was lower at 51.1 in March, but still showing expansion. Quarterly GDP reports released also showed a 0.30% Q4 growth while on an annualized basis; French GDP grew at a pace of 1.40%. The Bank of France expects Q1 2016 GDP to grow at a pace of 0.30%, down from initial forecasts of 0.40%.


UKGDP edges higher, current account deficit widens

Data released by the Office for National Statistics yesterday showed that the UK's GDP expanded at a pace of 0.60%, more than the expected 0.50% growth during the fourth quarter of 2016. On an annualized basis, UK's GDP accelerated from 1.90% to 2.10% in 2015. However, quarterly current account deficit data showed a bigger than expected increase as the UK's trade deficit widened to 32.7 billion GBP, more than the expected 21.2 billion and up from 17.5 billion deficit in the third quarter of 2015 showing that Britain continues to rely heavily on foreign investment to plug its trade deficit gap.


Canada GDP advances 0.60% in January

Beating forecasts, Canada's economy surged ahead in January rising for the fourth consecutive month at a pace of 0.60%, led by manufacturing sector recording the strong gains in a decade. On an annualized basis, Canada's GDP expanded 1.50% above expectations of 1.0% in January, while previous month's numbers were also revised higher from 0.50% to 0.60%. Manufacturing gains were seen broadly due to a weaker Canadian dollar and increasing demand from the US. The sector alone gained 1.90% during the month, posting the fastest pace of gains since March 2004. In a separate report released by Statistics Canada, the average weekly earnings in Canada increased 0.40% in January from a year ago but remained 0.70% lower on a month over month basis.


March nonfarm payrolls to show an increase 206k jobs

The March payrolls report due later today at 12:30 GMT is expected to show that the US economy added 206k jobs in the month of March, lower than February's initial report of 242k. The US unemployment rate is expected to remain unchanged at 4.90% for a third month in a row. The focus will of course be on the average hourly earnings. Forecasts are for an increase of 0.20% in March following the decline of 0.10% in February. On an annualized basis, average hourly earnings are expected to remain at 2.20% unchanged from February's print. Following the NFP report, US ISM manufacturing PMI report will be released with forecasts pointing to a shift in the index back above the 50 level to show expansion in the manufacturing sector.


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