December 14, 2017

Chinese Manufacturing Grows More Than Expected

HONG KONG — A closely watched survey of manufacturing-sector activity in China provided the latest indication on Thursday that the world’s second-largest economy appears to have bottomed out after many months of slowing growth.

The early reading of the monthly purchasing managers’ index, compiled by the research firm Markit and released by the British bank HSBC, jumped to 50.1 points in August, from 47.7 in July, and easily beat analyst expectations. The increase, to a four-month high, also took the reading to just above 50 – the level that separates contraction and expansion.

The HSBC P.M.I. for China offers one of the earliest indications each month of how the economy is doing, and Thursday’s reading is likely to solidify expectations that a stabilization that had begun to show in July has continued into August.

It “adds to the number of green shoots indicating a stabilizing economy since July,” Li Wei and Stephen Green, economists at Standard Chartered, wrote in a note, adding that government-led measures aimed at shoring up economic growth, like tax breaks for small businesses and steps aimed at speeding up railway construction, appeared to have begun to take effect.

Future P.M.I. surveys, they said, were likely to “continue to hover between 50 and 53 in the coming months, with no dramatic improvement.”

The Chinese authorities’ approach of targeted economy-bolstering tweaks focused on specific areas contrasts with the big-bang stimulus adopted after the global financial crisis and highlights Beijing’s willingness to accept slower growth as it tries to reduce the economy’s reliance on cheap credit, investments and exports.

After years of double-digit expansion, the economy has now settled into a slower pace of growth, of around 7.5 percent this year. And despite the unexpectedly firm P.M.I. result on Thursday, some analysts said the picture could well cloud over again next year.

Yao Wei, China economist at Société Générale Hong Kong, said that government-driven infrastructure investment should be able in the short term to offset problems like the renminbi’s strength relative to many other emerging Asian currencies, many of which have fallen sharply in recent months. A rebound in the third quarter is “almost certain,” Ms. Yao said.

However, she added, a similar pickup during the fourth quarter of last year, which was also aided by government policy, was short-lived. Given efforts to rein in shadow-banking activities and potential headwinds from abroad as the Federal Reserve scales back its support of the U.S. economy, “we caution that this uptick may not last either.”

Article source: http://www.nytimes.com/2013/08/23/business/global/chinese-manufacturing-sector-unexpectedly-grows.html?partner=rss&emc=rss

Markets Slip Despite Positive Data

Stocks pulled back from record highs Wednesday afternoon.

By the end of trading, the Standard Poor’s 500-share index was 0.4 percent lower and the Dow Jones industrial average fell 0.2 percent. The Nasdaq composite, after dipping, ended less than a point higher.

The big mover was Apple, which said sales of iPhones helped quarterly profits rise by more than expected. Its shares were 5.2 percent higher.

“Last night’s numbers from Apple were also a welcome respite for the tech sector which has struggled in the current earnings season,” said Andy McLevey, head of dealing at Interactive Investor.

Markit, a financial information company, said its monthly purchasing managers’ index for the 17 European Union countries that use the euro rose for the fourth consecutive month in July, to 50.4 points, from 48.7 the previous month.

The increase, larger than anticipated, suggests the euro zone economy is growing again; anything above 50 points indicates an expansion. Hopes have grown of late that official figures next month may show that the euro zone’s recession, which started in late 2011, may have come to an end in the second quarter.

In Europe Germany’s DAX rose 0.8 percent to close at 8,379.11 while the CAC 40 in France rose 1 percent to 3,962.75. The FTSE 100 index of leading British shares ended 0.4 percent higher at 6,620.43. Markit’s P.M.I. survey did little for the euro, which was trading flat, but near recent highs, at $1.3211.

Earlier during the Asian session, Chinese shares were in focus after a survey showed the country’s manufacturing fell to its lowest point in nearly a year. HSBC said its preliminary estimate for its purchasing managers’ index for July declined more than expected, to an 11-month low, another sign of a deepening economic slowdown.

The widely watched report is one of the earliest indicators on the health of China’s economy, the world’s second-biggest after that of the United States. Analysts say the findings pave the way for more disappointment.

The Shanghai Composite Index in mainland China closed 0.5 percent lower, at 2,033.33 points, after falling as much as 1.3 percent.

Elsewhere in Asia, Japan’s Nikkei 225 dropped 0.3 percent, to 14,731.28 points. Other indexes reversed earlier losses to finish in positive territory. Hong Kong’s Hang Seng gained 0.2 percent, to 21,968.93 points, and South Korea’s Kospi rose 0.4 percent, to 1,912.

In the oil markets, the benchmark crude contract for September delivery was down $1.98 at $105.25 a barrel on the New York Mercantile Exchange.

Article source: http://www.nytimes.com/2013/07/25/business/daily-stock-market-activity.html?partner=rss&emc=rss

Chinese Factories Appear to Be Stabilizing

HONG KONG — Two surveys that take the temperature of China’s giant manufacturing sector showed an economy that appears to have stabilized for now but that is still struggling to recover some of the momentum it lost at the start of the year.

The two purchasing managers’ indexes — one published by the Chinese statistics bureau on Saturday, the other released by the British bank HSBC on Monday — painted somewhat divergent pictures for May, though both underlined the fact that the factory sector is still struggling with lackluster demand.

The official survey, which is more focused on large and midsize state-owned companies of the kind that benefit from state-led investment, provided a positive surprise by edging up slightly, to 50.8 in May, from 50.6 in April. Economists polled by Reuters had expected the index to slip toward the 50-point level, with figures above indicating expansion and those under showing contraction.

On the other hand, the final version of the HSBC index for May, compiled by the research firm Markit and released Monday, came in at 49.2 points. The reading was a downward revision from the preliminary number of 49.6, which had been published on May 23, and showed conditions at their weakest in eight months. The HSBC gauge is more focused on smaller companies, which have benefited less than their larger counterparts from the recent credit expansion, HSBC said in a research note.

“Overall conditions for China’s manufacturing sector were at best stabilizing at a relatively low level in May,” HSBC economists said, adding that a batch of official economic data for May, to be released this coming weekend, could provide more clarity on China’s growth outlook. “Beijing policy makers continue to face a tough challenge in striking an appropriate balance between the need to push through structural reforms versus the need to preserve near-term growth,” they said.

After years of double-digit expansion, China’s pace of growth has cooled in recent years — a slowdown that has in part been deliberately engineered by the authorities in Beijing as they try to ease a potentially worrisome flood of lending, forestall asset price bubbles and direct the economy toward higher-quality expansion.

Beijing is targeting 7.5 percent growth this year, a rapid clip compared with the rates of expansion of other leading economies but a significantly slower pace than the 9.3 percent growth in 2011 and the 10.4 percent in 2010.

“While the data may ease some concerns of rapid deteriorating of the Chinese economy, the impact may be short-lived,” economists at Australia New Zealand Banking in Hong Kong said in a research note on the official purchasing managers’ index, adding that structural reforms were needed to help sustain growth prospects.

Article source: http://www.nytimes.com/2013/06/04/business/global/chinese-factories-appear-to-be-stabilizing.html?partner=rss&emc=rss

Manufacturing Growth in China Slows

HONG KONG — Growth in China’s important factory sector slowed in April, a closely watched monthly index released Tuesday showed, adding to concerns that the pace of China’s overall economic growth may be faltering.

The index, which is based on a survey of purchasing managers in the manufacturing sector and released by HSBC, came in at 50.5 points for April — still above the level of 50 that separates expansion from contraction, but markedly lower than the 51.6 points recorded for March.

The release is one of the earliest measures of business activity available for the month of April and appears to indicate that an unexpected growth slowdown during the first quarter may be carrying on into the second quarter.

China’s first-quarter growth data, released by the authorities in Beijing last week, surprised analysts who had believed that the economy had picked up speed during the months of January, February and March. Instead, expansion slowed to 7.7 percent from a year earlier – down from 7.9 percent the previous quarter.

The manufacturing survey released on Tuesday reinforced the view that growth is unlikely to pick up again during the current quarter.

‘’The overall message’’ from the release ‘’is that there was some improvement in the manufacturing sector’’ around the start of the fourth quarter of 2012, but that ‘’the momentum then stalled’’ in the first quarter of this year, wrote Yao Wei, China economist at Société Générale in Hong Kong.

Investors, unnerved by the disappointing reading, sent the mainland China stock market down 2.6 percent on Tuesday. In Hong Kong, the Hang Seng fell 1.1 percent.

In part, weakening demand for exports is to blame. Orders for new exports contracted in April after a temporary rebound in March, suggesting external demand for China’s exporters remains weak, according to Qu Hongbin, a China economist at HSBC.

Weaker overall demand has also started to weigh on employment in the manufacturing sector and is likely to prompt Beijing to respond with efforts to lift domestic investment and consumption in the coming months, Mr. Qu added in a statement accompanying the index.

Article source: http://www.nytimes.com/2013/04/24/business/global/manufacturing-growth-in-china-slows.html?partner=rss&emc=rss

Euro Watch: German Growth Report Provides Glimmer of Hope for Euro Zone

PARIS — A report Friday provided Europe with the faintest glimmer of hope, suggesting the German economy was growing again, but analysts played down the possibility of any imminent exit from the morass in which the bloc has found itself.

A broad survey of euro zone purchasing managers by Markit Economics, a data and analysis firm, showed activity in December reached its highest level in nine months, at 47.3, from 46.5 in November. Economists had been expecting a level of about 46.9.

While an improvement, a level below 50.0 still signals contraction.

Germany’s output rose in December for the first time in eight months, the data showed, though only modestly, and output continued to fall in France.

Chris Williamson, Markit’s chief economist, said the data suggested that the euro zone output might have reached bottom in October. Still, he said the data were consistent with expectations that G.D.P. would contract again in the final quarter of the year.

The purchasing managers data gives economists early clues to movements in the business cycle, and is fairly well correlated with G.D.P. over time.

Purchasing managers subindexes, covering the manufacturing and services sectors, also showed the rate of decline slowing, though demand for new business continued to fall, Markit said, “indicating that companies continued to face steeply deteriorating demand for goods and services.”

The euro zone economy contracted by 0.1 percent in the third quarter from the previous quarter, after a second-quarter decline of 0.2 percent.

The economy has been hurt by weak global growth, as well as the budget cutting measures regarded as critical to winning the trust of financial markets.

The cost of those measures is visible in the labor market: Eurostat, the statistical agency of the European Union, reported Friday that the number of employed people in the euro zone declined by 0.2 percent in the third quarter from the second quarter and by 0.7 percent from the third quarter of 2011. Most sectors of the economy suffered, with a 1.5 percent decline in the construction sector dragging most heavily on employment.

Eurostat said last month that the unemployment rate in the euro zone hit to a record 11.7 percent in October.

Ben May, an economist in London with Capital Economics, predicted that euro zone G.D.P. would slide by 0.3 percent in the fourth quarter, or about 1.2 percent on an annualized basis. Further, he noted, “a quarterly fall in GDP of 0.5 percent or more is not out of the question.”

Holger Schmieding, chief European economist at Berenberg Bank in London, predicted that euro zone would begin to rise from recession in the spring, helped by the determination of the European Central Bank to use “all necessary means“ to defend the euro, “rock-bottom“ interest rates and less pressure on governments to enact painful austerity measures.

Separately, an inflation report Friday showed subdued price pressures in the euro zone. Euro zone prices rose 2.2 percent in November from a year earlier, slowing from a 2.5 percent rise in October, Eurostat said. On a monthly basis, prices fell 0.2 percent in November from October.

Article source: http://www.nytimes.com/2012/12/15/business/global/daily-euro-zone-watch.html?partner=rss&emc=rss

Pullback in Manufacturing

The institute’s index of manufacturing conditions fell to a reading of 49.5 points last month, down from 51.7 in October.

Readings above 50 signal growth, while readings below indicate contraction. Manufacturing grew in October for only the second time since May. The institute is a trade group of purchasing managers.

A gauge of new orders dropped to its lowest level since August, a sign that production could slow in the coming months. Manufacturers also sharply reduced their stockpiles, indicating companies expected weaker demand.

“Today’s report suggests that the manufacturing sector is likely to remain a weak point in the recovery for a few months yet,” Jeremy Lawson, an economist at BNP Paribas, said in a note to clients.

The weak manufacturing survey overshadowed other positive economic reports. Greater home building in the United States bolstered construction spending in October by the most in five months. Manufacturing activity in China grew in November for the second straight month. And auto sales in the United States rebounded last month after Hurricane Sandy held sales back in October.

The institute said manufacturers are concerned about the sharp tax increases and government spending cuts that will take effect in January if Congress and the Obama administration fail to strike a budget deal before then.

These worries have led many companies to pull back this year on purchases of machinery and equipment, which signal investment plans. The decline could slow economic growth and hold back hiring in the October-December quarter.

A measure of hiring in the institute’s survey fell to 48.4 points, the lowest reading since September 2009.

Companies “are just backing off and not making any moves until things clear up a bit,” Bradley Holcomb, chairman of the Institute for Supply Management’s survey committee, said.

Consumers also appear nervous about higher taxes. Economists cited the prospect of higher tax rates in 2013 as a main reason consumer spending fell in October by the most since May.

When consumers cut back on spending, businesses typically reduce their pace of restocking. Both trends are expected to slow economic growth at the end of the year.

The economy grew from July through September at an annual rate of 2.7 percent, largely because of strong growth in inventories. Most economists predict growth is slowing in the current October-December quarter to a rate below 2 percent.

Hurricane Sandy had little impact on factory activity last month, according to the institute’s survey. The storm hit the East Coast on Oct. 29 and affected businesses in 24 states.

A gauge of production in the survey rose in November for the third straight month. That’s a sign that the hurricane didn’t force many factory shutdowns.

A slowdown in global growth has weighed on American manufacturers. New export orders slipped in November for the second straight month.

Surveys show consumers remain upbeat about the economy, despite the looming taxes and spending cuts. A measure of consumer confidence reached a five-year high in November.

If lawmakers and President Obama can work out a budget deal that averts the tax increases, most economists predict a good year for the economy.

Article source: http://www.nytimes.com/2012/12/04/business/economy/pullback-in-manufacturing.html?partner=rss&emc=rss

Euro Watch: Euro Zone Manufacturing Declines

PARIS — A European economic report Friday confirmed a continuing slowdown in the euro zone’s factories, even as Washington reported data indicating a moderate improvement in the American economy.

Euro zone manufacturing declined for a 15th consecutive month in October, according to a survey of purchasing managers by Markit Economics, a research firm.

The final Markit purchasing managers’ index fell to 45.4 in October from 46.1 in September. A number below 50 signals contraction.

“A broad-based decline in production was seen across the consumer, intermediate and investment goods sectors,” Rob Dobson, a Markit economist, wrote in a note, “as manufacturers faced a restrictive combination of weak demand from domestic markets and declining intra- and extra-euro area trade flows. Cost caution also prevailed, leading to cutbacks in employment, purchasing and the disinvestment of inventories.”

Data from individual countries were also sobering, he noted, as Ireland was the only euro zone country not to report a contraction.

“This is further evidence that the ongoing weakness of the periphery is being combined with hollowing out of the previously strong core of France and Germany,” Mr. Dobson said.

The figures for Britain, not a member of the euro zone, were scarcely better, with the manufacturing index falling to 47.5 in October from 48.1 in September.

Attention in the euro zone is now beginning to focus on a meeting of euro zone finance ministers Nov. 12 in Brussels, where officials are expected to move toward decisions on what to do about the thorny situations in Greece and Spain.

The U.S. economy, meanwhile, appears to be continuing its slow recovery. In the last assessment of the job market before the presidential election, the Labor Department announced Friday that employers added 171,000 positions in October, and more jobs than initially estimated in both August and September.

The unemployment rate ticked up slightly in October, to 7.9 percent from 7.8 percent in September, as more people joined the labor force and so officially became counted as unemployed.

The report reinforced expectations that the U.S. economy, for all its problems, would continue to outpace Europe’s. A report this month from Eurostat, the statistical agency of the European Union, is expected to show the euro zone’s economy back in recession, with gross domestic product contracting for a second consecutive quarter in the three months through September.

The euro slipped 0.7 percent from the New York close Thursday, to $1.2847.

Article source: http://www.nytimes.com/2012/11/03/business/global/daily-euro-zone-watch.html?partner=rss&emc=rss

Manufacturing and Construction Lift Outlook on U.S. Economy

The Institute for Supply Management, a trade group of purchasing managers, said on Tuesday that its manufacturing index rose to 53.9 in December from 52.7 in November. Readings above 50 indicate expansion.

Also on Tuesday, the Commerce Department reported that spending on construction projects rose 1.2 percent in November, following a revised 0.2 percent drop in October. The increase was the third in four months and the largest since a 2.2 percent rise in August.

The November increase pushed spending to a seasonally adjusted annual rate of $807.1 billion, still barely half the $1.5 trillion that economists consider healthy. Analysts say it could be four years before construction returns to healthy levels.

United States manufacturing has expanded for more than two years. Factories were one of the first areas of the economy to start growing after the recession officially ended in June 2009.

The latest survey from the Institute for Supply Management showed that domestic factories should start the year strongly. Factories hired last month at the fastest pace since June, the survey found. A measure of new orders rose, a good sign for future output. And exports also increased last month, though it was not clear how long that would last. The economy in Europe is faltering as the Continent continues to address its debt crisis.

Consumers are gaining confidence and are spending more. Some economists were forecasting that car sales increased in December after a strong month of sales in November. That should improve output among automakers and also steel companies, tire makers and others that supply the industry.

Orders for long-lasting manufacturing goods jumped in November, the Commerce Department said last month. Most of that increase reflected a huge rise in commercial aircraft orders, a volatile category.

Still, demand for core capital goods, which are often a proxy for business investment plans, fell for the second straight month. Business spending was a crucial driver of economic growth in 2011. If businesses trim spending, economic growth is likely to slow.

Businesses are less likely to retreat, however, if the economy continues to improve.

For construction in November, strength was seen in housing and government spending. Nonresidential construction fell, reflecting declines in construction of office buildings and shopping centers.

The industry was hit hard by the housing bust and has had trouble recovering. But home construction has begun a gradual rebound and should add to the nation’s economic growth. The chief reason is that apartments are being built almost twice as fast as two years ago. Renting is often the only option for many people who have lost their jobs, their homes or both.

Builders in November broke ground on homes at a seasonally adjusted annual rate of 685,000. That was a 9.3 percent jump from October and the fastest pace since April 2010.

Builders should start at least 600,000 homes this year. That is up from 587,000 last year and 554,000 in 2009 — the worst year on record — but it is half the number that economists expect in a healthy market.

Even so, the recovery appears to be strengthening, if fitfully. Last week, the Conference Board said its consumer confidence index rose in December to the highest level since April. That is important because consumer spending accounts for about 70 percent of the economy.

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German Unemployment Edges Lower, Reaching 6.8%

FRANKFURT — The German economy remained mostly immune to the malaise afflicting the rest of the euro zone in December, with data released Tuesday showing that unemployment fell slightly during the month and that the average number of jobless people for the full year was the lowest in two decades.

With nearly half a million job openings, Germany appears likely to continue to resist the downward pull of the sovereign debt crisis, at least for several months. The seasonally adjusted unemployment rate fell to 6.8 percent in December from 6.9 percent in November.

The jobless figures came after a number of recent indicators that have been better than expected, helping to drive increases in European stock indexes on Tuesday.

But economists question whether Germany, which has Europe’s largest economy, can remain unaffected by the recession spreading across the rest of the Continent. The German jobless rate contrasts with that of the euro area as a whole, at more than 10 percent.

“Germany is no island, and its economy will rock in this crisis just like any other,” Carl B. Weinberg, chief economist of High Frequency Economics, wrote in a note to clients on Tuesday.

Just how much is a matter of renewed debate, after a number of recent indicators were not quite as bad as economists expected. For example, a survey of British purchasing managers published on Tuesday by the data provider Markit Economics was better than analysts forecast, in part because of an improvement in exports.

Confidence in the euro zone has improved somewhat after the European Central Bank in December flooded banks with low-cost loans, which also helped to push down short-term borrowing costs for some countries. An improving United States economy would also help Europe, which exports many of its goods to the country.

“Uncertainty is still high,” said Eckart Tuchtfeld, an economist at Commerzbank in Frankfurt. “However, for the time being the situation does not seem to be deteriorating sharply.” As long as there is no acceleration of the sovereign debt crisis, Mr. Tuchtfeld said, “we are pretty confident it might not get as bad as people have been expecting.”

The German labor market continues to benefit from changes in 2005 that removed some job protections and put more pressure on unemployed people to look for work. The changes helped German companies become more competitive and take advantage of surging demand for industrial goods from China and other developing countries.

Rigid labor rules in other countries are among the root causes of the debt crisis, economists say. Unemployment stands at more than 18 percent in Greece and nearly 23 percent in Spain. A lack of growth and competitiveness have amplified the two countries’ debt problems.

Germany had its best year almost since reunification in 1990. The average number of unemployed workers in Germany averaged less than three million for all of 2011, a rate of 7.1 percent, the lowest level since 1991.

German companies continue to look for workers despite signs of a slowdown. The number of unfilled jobs in December was 467,000, the German Federal Employment Agency said, an increase of 87,000 from a year earlier. Almost all industries were looking for workers, especially in fields like electronics, machinery and health care.

Mr. Tuchtfeld said unemployment was likely to rise in the spring, but not drastically. Companies will probably take advantage of government subsidies that encourage them to put workers on reduced hours rather than cutting jobs. Such programs allowed German unemployment to fall during much of 2009 despite a sharp downturn.

Without adjusting for the rise in unemployment that is typical for December, the German jobless rate rose to 6.6 percent from 6.4 percent. But there were still 231,000 fewer jobless people than in December 2010.

Article source: http://www.nytimes.com/2012/01/04/business/global/german-joblessness-falls-to-lowest-level-in-two-decades.html?partner=rss&emc=rss

Index Points to Weakness in Chinese Economy

BEIJING — Chinese factory activity shrank again in December as demand at home and abroad slackened, a purchasing managers’ survey showed Friday, reinforcing the case for pro-growth policies to bolster the economy.

Also Friday, the renminbi closed at a record high against the dollar, passing through resistance at 6.30 renminbi to the dollar and ending the year with an appreciation of 4.7 percent. Traders said there had been signs that the central bank intervened to push the renminbi up at the end of the year.

The HSBC purchasing managers’ index, designed to preview the state of Chinese industry before official output data are published, edged up to 48.7 in December, from a 32-month low of 47.7 in November. The HSBC index has been mostly under 50, which separates expansion from contraction, since July.

The official index, due to be published Sunday, is expected to paint a similar picture, suggesting that the world’s second-largest economy after the United States is finishing 2011 on a weak note, in tandem with the global economic outlook.

“While the pace of slowdown is stabilizing somewhat, weakening external demand is starting to bite,” said Qu Hongbin, China economist at HSBC. “This, plus ongoing property market corrections, adds to calls for more aggressive action on fiscal and monetary fronts to stabilize growth and jobs, especially with prices easing rapidly.”

Mr. Qu said China would avoid a hard economic landing as long as policy easing measures filtered through in the coming months.

HSBC said a purchasing managers’ index reading of as low as 48 in China still pointed to annual growth of 12 to 13 percent in industrial output.

China’s once turbocharged economy is on track to slow for a fourth successive quarter, easing further from the 9.7 percent annual growth rate of the first quarter, with economists expecting the final three months of the year to have slipped below 9 percent.

On the currency front, the renminbi’s gains for the year are in line with the 4 percent to 5 percent that traders on the mainland had expected at the start of the year.

Traders forecast that the renminbi would keep appreciating in 2012, as China faces pressure from the United States to do more to rebalance bilateral and world trade, while it continues to record trade surpluses. But the rate of appreciation is expected to slow to about 3 percent in 2012, with most of the gains happening in the second half, they said.

All told, the renminbi appreciated 4.7 percent in 2011. It has risen 8.5 percent since June 2010, when the government abolished a peg to the dollar that had lasted two years, and 31.5 percent since the peg was lifted in July 2005.

There is speculation that the renminbi will depreciate in the near-term as exports are buffeted by recession in major economies, though analysts expect the longer-term uptrend to remain intact.

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