Macro Roundup (Nov 5)

2018-11-05 10:11:13

This is a roundup of global macroeconomic news last weekend and what is expected today.

Last weekend

The US dollar index rebounded and closed at 96.49 last Friday on upbeat US non-farm payrolls. However, concerns about data for the upcoming service purchasing managers’ index (PMI) limited the rise of the US dollar. 

LME and SHFE base metals ended higher for the most part on Friday night with LME copper leading the gains and closing 2.7% higher. LME lead jumped 2.58%, nickel grew 0.89%, aluminium rose 0.56%, zinc went up 0.31%, while tin inched down. 

SHFE copper surged 1.64%, lead increased 0.64%, nickel rose 0.52%, and others nudged up. 

German manufacturing fell to its lowest in nearly two-and-a-half years in October as orders dropped for the first time since late-2014, final data from IHS Markit showed on Friday.

The manufacturing PMI, dropped to 52.2 from 53.7 in September. The flash reading released on October 24 was 52.3. The reading fell for a third month in a row in October.

The eurozone manufacturing PMI expanded at the slowest pace in more than two years in October, final data from IHS Markit showed on Friday. Data in October fell to a 26-month low of 52 from 53.2 in September.

"The combination of destocking, deteriorating order books and drop in business optimism will add to concerns that growth risks are shifting to the downside rather than being "broadly balanced", as indicated by the ECB," Chris Williamson, chief business economist at IHS Markit, said.

The US total nonfarm payroll employment rose by 250,000 in October as its labour pool hit a record high of 156.56 million workers, announced the US Bureau of Labor Statistics on Friday.

Between September and October, the US jobless rate remained unchanged at 3.7% as total nonfarm payroll employment gains were made mostly in healthcare, manufacturing, construction, and transportation and warehousing. The Labor Department’s snapshot of the US job marketplace beat economists’ expectations of a gain of 188,000 jobs and a jobless rate of 3.7%, according to a monthly survey by The Wall Street Journal.

"The report shows a booming US economy with a sufficient whiff of wage inflation to keep the Fed on track to raise rates in December and at least twice next year,”said David Kelly, chief global strategist at JPMorgan in New York.

The US trade deficit increased last September by 1.3% to reach $54 billion, inflated by a historic volume of imports that rose to $266.6 billion despite the protectionist policies of the White House, according to the Department of Commerce.

That result was worse than in August, when the trade balance showed a deficit of $53.2 billion following a 6.4% rise and was also below analysts' forecast of a $53.3 billion deficit in September, the Department said on Friday.

The US factory goods orders increased more than expected in September, by 0.7% from August amid strong demand for transportation equipment. However, softening business spending on equipment suggested that manufacturing could be slowing.

Data for August was revised up to show factory orders surging 2.6% instead of the previously reported 2.3% increase.

Worker shortages, an increasingly bitter trade war between the US and China, a strong dollar and slowing global economic growth are restraining momentum in manufacturing, which accounts for about 12% of the US economy, commented Reuters. 

Day ahead

Economic data slated for release today include China’s Caixin PMI for October, the eurozone Sentix investor confidence index, and the US ISM non-manufacturing PMI.