Thu 1 Mar 2018


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In Portfolioticker today

read_this Hey Jarvis, how did we go today?

  • Today at the stock market Opinion
  • The portfolio today Opinion
  • VMware Earnings Report. Q3/2018
  • flag_australia AU: Commonwealth Bank Manufacturing PMI. Feb 2018
  • flag_australia AU: Private New Capital Expenditure and Expected Expenditure. Dec 2017
  • flag_europe EU: Unemployment. Jan 2018
  • flag_europe EU: Markit Eurozone Manufacturing PMI. Feb 2018
  • flag_usa US: Unemployment Insurance Weekly Claims Report
  • flag_usa US: Personal Income and Outlays. Jan 18
  • flag_usa US: IHS Markit US Manufacturing PMI. Feb 2018
  • flag_usa US: ISM Report on Business (PMI) – Manufacturing. Feb 2018
  • flag_usa US: Construction Spending (Construction Put in Place). Jan 18
  • Global: JPMorgan Global Manufacturing PMI. Feb 2018
  • flag_usa US: Trump Announces Tariffs in Steel and Aluminium
  • News
  • flag_japan Japan Update
  • flag_china China Update
  • Today at the stock market

    bull/bearThe Dow and S&P 500 registered a third straight day of more than 1 percent declines on Thursday after President Donald Trump said the United States would impose import tariffs on steel and aluminum, raising concern about higher prices and a trade war.

    • The S&P 500 index fell 36.16 points, or 1.33%, to 2,677.67
    • The Dow Jones Industrial Average fell 420.22 points, or 1.68%, to 24,608.98
    • The Nasdaq Composite index fell 92.45 points, or 1.27%, to 7,180.56
    • Declining issues outnumbered advancing ones on the NYSE by a 1.47-to-1 ratio; on Nasdaq, a 1.42-to-1 ratio favored decliners.
    • The S&P 500 posted two new 52-week highs and 25 new lows; the Nasdaq Composite recorded 43 new highs and 100 new lows.
    • About 9.0 billion shares changed hands on U.S. exchanges. That compares with the 8.4 billion daily average for the past 20 trading days, according to Thomson Reuters data.

    Today’s declines put the Dow into negative territory for the year and drove the Cboe Volatility Index (VIX) to its highest close since 13 Feb 2018, denting the market’s recent recovery from deep losses in early Feb 2018.

    Shares of auto makers and other big consumers of steel and aluminum added to their session losses after Trump said the U.S. would impose tariffs of 25% on steel imports and 10% on imported aluminum next week, while shares of U.S. steel and aluminum companies jumped.

    On the day, General Motors Co shares lost 4%, while Ford Motor Co was down 3.0%. U.S. Steel shares rose 5.7%, while shares of Nucor climbed 3.3%.

    Industrial heavyweights like Boeing and Caterpillar also fell as investors worried about higher raw material costs and trade barriers elsewhere. Boeing was down 3.5% and Caterpillar was down 2.8%.

    “It’s always a concern about what’s the retaliatory response to this. Underlying all of these trade issues here, when you have trade wars, is again fueling inflation, because presumably prices are going to be higher,” said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana.

    Rising inflation and bond yields were the main concerns as Wall Street ended a turbulent February on Wednesday, with the Dow and S&P 500 capping their worst month since Jan 2016.

    The S&P 500 is down 3.7% since Monday’s close. Thursday’s fall marked its 3rd straight day of declines of at least 1%, the first such streak for the index since Jan 2016.

    Last month confirmed a 10% correction for the S&P, which is still down more than 6% from its 26 Jan 2018 record high.

    Stocks had mostly traded lower before Trump’s announcement.

    Federal Reserve Chairman Jerome Powell tried to temper remarks he made on Tuesday that raised concerns about the potential for 4 interest rate hikes this year rather than the Fed’s forecast of 3, but New York Fed President William Dudley, speaking in Sao Paulo, Brazil, was a bit more pointed and said 4 rate hikes would be “gradual.” Indexes edged lower following Dudley’s remarks, but investors said it was the tariff issue that drove the afternoon selloff.

    “We got in and out of monetary policy concerns pretty well and this caught us by surprise,” said Art Hogan, chief market strategist at B. Riley FBR in New York.Reuters

    Market indices

    Market indices
    ^ Market indices today (mouseover for 12 month view) Chart: Google Finance

    Index Ticker Today Change 31 Dec 17 YTD
    S&P 500 SPX (INX) 2,677.67 -1.34% 2,673.61 +0.15%
    DJIA INDU 24,608.98 -1.68% 24,719.22 -0.45%
    NASDAQ IXIC 7,180.56 -1.28% 6,903.39 +4.01%

    Portfolio Indices

    USD and AUD denominated indices over the past 52 weeks (Chart: Bunting)
    ^ USD and AUD denominated indices over the past 52 weeks Chart: Bunting

    Index values

    Index Currency Today Change 31 Dec 17 YTD
    USD-denominated Index USD 3.249 -1.85% 3.068 +5.91%
    Valuation Rate USD/AUD 0.78100 -0.08% 0.78528 -0.55%
    AUD-denominated Index AUD 4.162 -1.77% 3.909 +6.48%

    Portfolio stock prices

    Stock Ticker Today Change 31 Dec 17 YTD
    Alphabet A GOOGL $1,071.41 -2.95% $1,053.00 +1.74%
    Alphabet C GOOG $1,069.52 -3.19% $1,045.65 +2.28%
    Apple AAPL $175 -1.76% $169.23 +3.40%
    Amazon AMZN $1,493.45 -1.26% $1,169.54 +27.69%
    Ebay EBAY $42.27 -1.38% $37.76 +11.94%
    Facebook FB $175.94 -1.34% $176.46 -0.30%
    PayPal PYPL $78.64 -0.97% $73.61 +6.83%
    Twitter TWTR $32.24 +1.19% $24.01 +34.27%
    Visa V $120.40 -2.07% $114.02 +5.59%
    VMware VMW $123.66 -6.15% $125.32 -1.33%

    FX: USD/AUD

    USD

    DXY movements
    ^ Bloomberg Dollar Spot Index (DXY) movements today (mouseover for 12 month view) Chart: Bloomberg

    The Bloomberg Dollar Spot Index (DXY) fell 0.3%.
    The EUR rose 0.6% to USD 1.2264.
    Britain’s GBP rose 0.1% to USD 1.3776.

    The yield on 10-year Treasuries fell 5 basis points to 2.81%.Bloomberg

    AUD

    AUD movements
    ^ AUD movements against the USD today (mouseover for 12 month view) Chart: xe.com

    Oil and Gas Futures

    Futures prices

    Prices are as at 15:49 ET

    • NYMEX West Texas Intermediate (WTI): $61.37/barrel -0.44% Chart
    • ICE (London) Brent North Sea Crude: $64.20/barrel -0.82% Chart
    • NYMEX Natural gas futures: $2.69/MMBTU +0.79% Chart

    VMware Earnings Report. Q3/2018

    Press Release Extract [vmw]

    VMware, Inc. (NYSE:VMW), a leading innovator in enterprise software, today announced financial results for the fourth quarter and full fiscal year 2018:

    • Record annual revenue of $7.92 billion, increasing 12% year-over year
    • Q4 revenue of $2.31 billion, increasing 14% year-over-year

    Quarterly Review

    • Revenue for the fourth quarter was $2.31 billion, an increase of 14% from the fourth quarter of 2016.
    • License revenue for the fourth quarter was $1.07 billion, an increase of 20% from the fourth quarter of 2016.
    • GAAP net loss for the fourth quarter was $440 million, or $1.09 per diluted share, compared to GAAP net income of $441 million, or $1.04 per diluted share, for the fourth quarter of 2016. GAAP results include an estimated net tax expense recognized in connection with the enactment of the Tax Cuts and Jobs Act of $970 million. An estimated $800 million of this tax relates to the international portion of our earnings, and an estimated $167 million of this tax relates to the re-measurement of deferred taxes using lower U.S. tax rates. Non-GAAP net income for the quarter was $691 million, or $1.68 per diluted share, up 18% per diluted share compared to $597 million, or $1.43 per diluted share, for the fourth quarter of 2016.
    • GAAP operating income for the fourth quarter was $648 million, an increase of 19% from the fourth quarter of 2016. Non-GAAP operating income for the fourth quarter was $862 million, an increase of 15% from the fourth quarter of 2016.
    • Operating cash flows for the fourth quarter were $847 million. Free cash flows for the quarter were $748 million.
    • Total revenue plus sequential change in total unearned revenue grew 14% year-over-year.
    • License revenue plus sequential change in unearned license revenue grew 13% year-over-year.

    Annual Review

    • Revenue for fiscal year 2018 was $7.92 billion, an increase of 12% from 2016.
    • License revenue for fiscal year 2018 was $3.19 billion, an increase of 14% from 2016.
    • GAAP net income for fiscal year 2018 was $570 million, or $1.38 per diluted share, compared to $1.19 billion, or $2.78 per diluted share, for 2016. GAAP results include an estimated net tax expense recognized in connection with the enactment of the Tax Cuts and Jobs Act of $970 million. An estimated $800 million of this tax relates to the international portion of our earnings, and an estimated $167 million of this tax relates to the re-measurement deferred taxes using lower U.S. tax rates. Non-GAAP net income for the year was $2.15 billion, or $5.19 per diluted share, up 18% per diluted share compared to $1.86 billion, or $4.39 per diluted share, for 2016.
    • GAAP operating income for fiscal year 2018 was $1.69 billion, an increase of 17% from 2016. Non-GAAP operating income for the year was $2.63 billion, an increase of 15% from 2016.
    • Operating cash flows for fiscal year 2018 were $3.21 billion. Free cash flows for the year were $2.95 billion.
    • Cash, cash equivalents and short-term investments were $11.65 billion, and unearned revenue was $6.25 billion as of February 2, 2018.

    “Our strong Q4 and terrific fiscal year 2018 results demonstrate the power of our broad-based portfolio and a strategy that continues to resonate, resulting in strong customer momentum,” commented Pat Gelsinger, chief executive officer, VMware. “As we celebrate our twentieth anniversary this year, we remain committed to delivering breakthrough software innovation that drives customer success.”

    “Q4 closed a strong fiscal year 2018 for VMware,” said Zane Rowe, executive vice president and chief financial officer, VMware. “We achieved $7.9 billion in revenue and operating cash flows of over $3.2 billion for the year, while continuing to invest in products and services to drive future growth.”

    Recent Highlights & Strategic Announcements

    • VMware announced expanded availability of VMware Cloud on AWS to include the AWS U.S. East (N. Virginia) region in addition to the U.S. West (Oregon) region. VMware and AWS also introduced additional VMware capabilities and support for VMware Site Recovery and VMware vMotion, making it even easier for customers to move, run and protect mission-critical applications at scale.
    • VMware completed its acquisition of VeloCloud Networks. This industry-leading, cloud-delivered SD-WAN solution is now a part of VMware’s growing software-based networking portfolio. The acquisition of VeloCloud significantly advances the company’s strategy of enabling customers to run, manage, connect and secure any application on any cloud to any device.
    • VMware introduced VMware Cloud Foundation 2.3, the latest release of its integrated hybrid cloud platform. VMware Cloud Foundation 2.3 introduces integrated cloud management platform (CMP) capabilities that provide customers with a simplified path to building a hybrid cloud, based on consistent infrastructure and operations.
    • In February, VMware and Pivotal announced the general availability of Pivotal Container Service (PKS). PKS is a Kubernetes-based container service designed to meet the needs of operators and developers by providing native Kubernetes combined with advanced day-1 and day-2 capabilities needed to run Kubernetes at scale in production.
    • VMware has been positioned in the Leaders quadrant of Gartner, Inc.’s February 2018 Magic Quadrant for Hyperconverged Infrastructure.
    • VMware has been positioned as a leader in The Forrester Wave™: Enterprise Mobility Management, Q4 2017, evaluating enterprise mobility management (EMM) vendors. The company was also named a leader in the “IDC MarketScape: Worldwide Enterprise Mobility Management Software for Ruggedized/IoT Device Deployments 2017 Vendor Assessment.”
    • VMware announced the general availability of VMware Pulse IoT Center, the first solution in a new family of VMware Internet of Things (IoT) offerings. VMware Pulse IoT Center is an enterprise grade, IoT device management and monitoring solution that helps Information Technology and Operational Technology organizations to onboard, manage, monitor and secure their IoT use cases from the edge to the cloud.

    VMware, “Earnings Report“, 1 Mar 2018 More

    Comment: Barron’s

    Shares of virtualization pioneer VMware (VMW) are down 66 cents in late trading, or half a percent, at $123, after the company this afternoon reported fiscal Q4 revenue and earnings that topped analysts’ expectations, and affirmed a previously offered outlook for 2019.

    In a first pass at the report, Mizuho’s Abhey Lamba notes the figure for license revenue came in higher than expected, at $1.068 billion versus consensus for $1.028 billion. “Billings” was also “modestly” higher.

    The report follows a drop in VMware stock during the regular session of 6%, prompted by a CNBC report that said Michael Dell, controlling shareholder of privately held Dell, is considering a reverse merger between Dell and VMware, of which it already owns the majority of shares outstanding, as my colleague Andrew Bary related. As Andrew notes, the report was actually good for the tracking stock for Dell’s investment in VMware, DVMT, which closed up 1.5% today.

    VMware’s revenue in the three months ended in Jan 2018 rose almost 14%, year over year, to $2.31 billion, yielding EPS of $1.68, excluding some costs. That was above the average estimate for $2.26 billion and $1.63 per share.Barron’s

    flag_australia AU: Commonwealth Bank Manufacturing PMI. Feb 2018

    Press Release Extract [au_pmi]

    Key findings:

    • PMI 55.6 in Feb 2018, up from 55.4 in Jan 2018

    au_pmi_20180301

    Australia’s manufacturing sector continued to improve strongly in February, supported by robust output growth and increased new business inflows. Buoyed by these trends, both business confidence and the rate of job creation reached fresh survey highs. As a result of higher staff levels, backlogs of work increased to a weaker extent. Meanwhile, strong demand led to intense pressures on supply chains, with delivery times rising.

    The headline index from the survey, the seasonally adjusted Commonwealth Bank Manufacturing Purchasing Managers’ Index™ (PMI®) – a composite indicator designed to measure the performance of the manufacturing economy – edged slightly higher to 55.6 in February, from 55.4 in January, signalling a strong rate of improvement in the health of the manufacturing sector. The headline PMI has recorded above the 50.0 no-change mark in each month since the survey began in May 2016.

    Australian manufacturers continued to raise output during February, extending the expansionary trend that has been observed since data collection began 22 months ago. That said, the rate of growth weakened to a four-month low. Nonetheless, new business inflows rose sharply and to a quicker extent amid reports of successful marketing campaigns and greater demand from abroad. Anecdotal evidence suggested that new work from US and Asia-Pacific based customers had underpinned a ten-month high in new export order growth.

    In line with improved demand, manufacturers were overwhelmingly confident regarding future output during February. In fact, the degree of optimism rose to a fresh survey high. Expectant that order book volumes will continue to expand, firms added to their payrolls at the fastest pace seen since the survey began in May 2016.

    Despite greater staff levels, outstanding business with Australian manufacturers increased in February. That said, the rate of accumulation eased to the lowest seen over the current 19-month sequence of rising backlogs. Capacity pressures were also apparent across supply chains. Average lead times lengthened due to strong demand and raw material shortages.

    On the price front, input cost inflation accelerated to an 11-month high amid higher food, fuel and metal prices. Subsequently, manufacturers raised factory gate charges to partly offset higher cost burdens. That said, the rate of output price inflation weakened slightly since January

    Comment

    Commenting on the Commonwealth Bank Manufacturing PMI data, Michael Blythe, Chief Economist at the Commonwealth Bank, said:

    “Australian manufacturers are reporting positive activity and positive expectations in the early months of 2018. The headline PMI picked up in February and is running above the average level over the life of the survey. Expectations for future output are running at record highs. Australian manufacturers are benefiting from the positive global backdrop. New export orders were up sharply in February. This extra demand is driving strong jobs growth. But capacity pressures remain evident in the run-down of finished goods stocks, lengthening supplier delivery times and rising backlogs of work. Rising input and output prices are one outcome.”

    IHS Market, “Commonwealth Bank Manufacturing PMI. Feb 2018“, 1 Mar 2018 More

    flag_australia AU: Private New Capital Expenditure. Dec 2017

    Press Release Extract [au_abs]

    Actual Expenditure (Volume Terms)

    • The trend volume estimate for total new capital expenditure rose by 0.8% in the December quarter 2017 while the seasonally adjusted estimate fell by 0.2%.
    • The trend volume estimate for buildings and structures fell by 0.2% in the December quarter 2017 while the seasonally adjusted estimate fell by 2.1%.
    • The trend volume estimate for equipment, plant and machinery rose by 2.1% in the December quarter 2017 while the seasonally adjusted estimate rose by 2.2%.

    Expected Expenditure (Current Price Terms)

    • This issue includes the fifth estimate (Estimate 5) for 2017-18 and the first estimate (Estimate 1) for 2018-19.
    • Estimate 5 for 2017-18 is $114,599m. This is 2.5% higher than Estimate 5 for 2016-17. Estimate 5 is 4.9% higher than Estimate 4 for 2017-18.
    • Estimate 1 for 2018-19 is $84,044m. This is 3.5% higher than Estimate 1 for 2017-18.

    ACTUAL NEW CAPITAL EXPENDITURE IN VOLUME TERMS

    Total Capital Expenditure

    The trend estimate for total new capital expenditure rose 0.8% in the December quarter 2017. By asset type, the trend estimate for buildings and structures fell 0.2% and equipment, plant and machinery rose 2.1%. The seasonally adjusted estimate for total new capital expenditure fell 0.2% in the December quarter 2017.

    Buildings and Structures

    The trend estimate for buildings and structures fell 0.2% in the December quarter 2017. Buildings and structures for Mining fell 4.5%, Manufacturing fell 0.1% and Other Selected Industries rose 3.6%. The seasonally adjusted estimate for buildings and structures fell 2.1% in the December quarter 2017. Mining fell 9.7%, Manufacturing rose 12.3% and Other Selected Industries rose 4.2% in seasonally adjusted terms.

    Equipment, Plant and Machinery

    The trend estimate for equipment, plant and machinery rose 2.1% in the December quarter 2017. Equipment, plant and machinery for Mining rose 10.4%, Manufacturing rose 1.2% and Other Selected Industries rose 0.8%. The seasonally adjusted estimate for equipment, plant and machinery rose 2.2% in the December quarter 2017. Mining rose 21.9%, Manufacturing fell 0.9% and Other Selected Industries fell 0.3% in seasonally adjusted terms.

    Mining

    The trend estimate for Mining fell 2.2% in the December quarter 2017. Buildings and structures fell 4.5% while equipment, plant and machinery rose 10.4%. The seasonally adjusted estimate for Mining fell 4.7% in the December quarter 2017. Buildings and structures fell 9.7% while equipment, plant and machinery rose 21.9% in seasonally adjusted terms.

    Manufacturing

    The trend estimate for Manufacturing rose 0.8% in the December quarter 2017. Buildings and structures fell 0.1% and equipment, plant and machinery rose 1.2%. The seasonally adjusted estimate for Manufacturing rose 2.6% in the December quarter 2017. Buildings and structures rose 12.3% and equipment, plant and machinery fell 0.9% in seasonally adjusted terms.

    Other Selected Industries

    The trend estimate for Other Selected industries rose 2.2% in the December quarter 2017. Buildings and structures rose 3.6% while equipment, plant and machinery rose 0.8%. The seasonally adjusted estimate for Other Selected Industries rose 1.7% in the December quarter 2017. Buildings and structures rose 4.2% while equipment, plant and machinery fell 0.3% in seasonally adjusted terms.

    Australian Bureau of Statistics, “5625.0 Private New Capital Expenditure. Dec-17“, 1 Mar 2018 More

    flag_europe EU: Unemployment. Jan 2018

    Press Release Extract [eu_ue]

    The euro area (EA19) seasonally-adjusted unemployment rate was 8.6% in January 2018, stable compared to December 2017 and down from 9.6% in January 2017. This is the lowest rate recorded in the euro area since December 2008. The EU28 unemployment rate was 7.3% in January 2018, stable compared to December 2017 and down from 8.1% in January 2017. This remains the lowest rate recorded in the EU28 since October 2008. These figures are published by Eurostat, the statistical office of the European Union.

    eu_ue_20180301

    Eurostat estimates that 17.931 million men and women in the EU28, of whom 14.111 million in the euro area, were unemployed in January 2018. Compared with December 2017, the number of persons unemployed decreased by 19 000 in the EU28 and by 10 000 in the euro area. Compared with January 2017, unemployment fell by 1.867 million in the EU28 and by 1.429 million in the euro area.

    Member States

    Among the Member States, the lowest unemployment rates in January 2018 were recorded in the Czech Republic (2.4%), Malta (3.5%) and Germany (3.6%). The highest unemployment rates were observed in Greece (20.9% in November 2017) and Spain (16.3%).

    eu_states_20180301

    Compared with a year ago, the unemployment rate fell in all Member States. The largest decreases were registered in Cyprus (from 12.6% to 9.8%), Greece (from 23.3% to 20.9% between November 2016 and November 2017), Croatia (from 12.2% to 9.8%), Portugal (from 10.1% to 7.9%) and Spain (from 18.4% to 16.3%).

    In January 2018, the unemployment rate in the United States was 4.1%, stable compared to December 2017 and down from 4.8% in January 2017.

    Youth unemployment

    In January 2018, 3.646 million young persons (under 25) were unemployed in the EU28, of whom 2.535 million were in the euro area. Compared with January 2017, youth unemployment decreased by 333 000 in the EU28 and by 280 000 in the euro area. In January 2018, the youth unemployment rate was 16.1% in the EU28 and 17.7% in the euro area, compared with 17.6% and 19.9% respectively in January 2017. In January 2018, the lowest rates were observed in the Czech Republic (5.8%), Estonia (6.5% in December 2017) and Germany (6.6%) while the highest were recorded in Greece (43.7% in November 2017), Spain (36.0%) and Italy (31.5%).

    Eurostat, “Unemployment. Jan 2018“, 1 Mar 2018 More

    flag_europe EU: Markit Eurozone Manufacturing PMI. Feb 2018

    Press Release Extract [eu_pmi]

    Key findings:

    • Final Eurozone Manufacturing PMI at 58.6 in February (Flash: 58.5, January Final: 59.6)
    • Broad-based expansion seen across all nations and sub-sectors in February
    • Selling price inflation accelerates to 82-month high, despite slower increase in input costs

    eu_pmi_20180301

    The eurozone manufacturing sector continued to expand at a robust pace in February. Although rates of increase in output and new orders eased further from the highs reached before the turn of the year, the sector is still enjoying one of its best growth spells over the past 18 years.

    The final IHS Markit Eurozone Manufacturing PMI® eased to a four-month low of 58.6 in February, down from 59.6 in January, better than the earlier flash estimate of 58.5 and well above its long-run average of 51.8. The PMI has remained above the 50.0 no- change mark, signalling expansion, for 56 months.

    The upturn remained broad-based by sector, with growth seen across the consumer, intermediate and investment goods industries. The strongest rate of increase was signalled by the PMI for the investment goods category, followed by intermediate goods and then consumer products. However, rates of increase eased across all three sectors.

    National PMI data also highlighted the broad-base of the upturn, with expansions seen in all of the countries covered. Growth was led by the Netherlands (survey record expansion), Germany and Austria. Although rates of increase eased in the latter two, and also in France, Italy and Ireland, growth was robust across the board. Spain and Greece both saw faster expansions, with Greece registering its best pace of improvement for 18 years.

    February saw a further marked increase in manufacturing production, albeit the slowest since last October. There were signs that output growth may ease further in the coming months. New orders and new export business both rose at weaker (albeit still solid) rates. The latter reflected, at least in part, the impact of the recent appreciation in the euro exchange rate.

    The upturn still maintained sufficient momentum to test capacity, however, leading backlogs of work to rise for the thirty-fourth successive month in February. Although the pace of increase slowed to a seven-month low, it stayed well above the series average.

    Rising levels of work-in-hand (but not yet completed) encouraged job creation at euro area manufacturers. The rate of expansion in employment was only slightly below the survey-record highs achieved in November and December of last year.

    Jobs growth was registered in all of the nations covered, with especially marked gains seen in the Netherlands, Germany and Austria. Greece was the only country to see a faster increase, with employment rising at a series-record pace.

    Input price inflation across the eurozone manufacturing sector eased from January’s 81- month high in February, but remained marked overall. In contrast, average output charges rose at the quickest pace in almost seven years. Rates of increase in both price measures were higher in the intermediate and investment goods sectors compared to consumer goods producers.

    Business confidence remained strong in the euro area manufacturing sector during February. Although the overall degree of positive sentiment eased slightly, it remained close to January’s series-record high. Optimism improved in France, Italy and Greece, and held steady at a record high level in the Netherlands.

    Comment

    Commenting on the final Manufacturing PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:

    “Although the Eurozone Manufacturing PMI fell for a second successive month in February, the survey data indicate that factories are still enjoying their best growth spell for 18 years. The average PMI for the first quarter so far is the second-highest since the spring of 2000, falling just short of the near- record peak seen in the fourth quarter of last year.

    “The broad-based nature of the upturn is especially welcome, with all surveyed countries reporting solid rates of expansion. Even Greece is enjoying its fastest growth for 18 years.

    “There are signs, however, that growth could cool further in coming months. A slowdown in growth of new export* order inflows to an 11-month low suggests that the appreciation of the euro may be starting to curb export sales. Job creation, while still among the highest seen in the twenty-year survey history, has meanwhile moderated as a result of the slower inflows of orders, adding to suspicions that the manufacturing growth peak is behind us.

    “The rise in input buying was the lowest for seven months, hinting that factories are expecting slower production growth in March.

    “Some of the slowdown may, however, be due to capacity constraints. Skill shortages are being increasingly reported and supply chains are being stretched to one of the greatest extents on record. These signs of overheating have important implications for inflation. In terms of prices, the stronger euro appears to be helping bring down imported inflation, but widespread cases of demand exceeding supply highlight the ongoing presence of solid underlying core inflationary pressures.”

    IHS Markit, “Markit Eurozone Manufacturing PMI. Feb 2018“, 1 Mar 2018 More

    flag_usa US: Unemployment Insurance Weekly Claims Report

    Press Release Extract [ser_4]

    In the week ending February 24, the advance figure for seasonally adjusted initial claims was 210,000, a decrease of 10,000 from the previous week’s revised level. This is the lowest level for initial claims since December 6, 1969 when it was 202,000. The previous week’s level was revised down by 2,000 from 222,000 to 220,000. The 4-week moving average was 220,500, a decrease of 5,000 from the previous week’s revised average. This is the lowest level for this average since December 27, 1969 when it was 219,750. The previous week’s average was revised down by 500 from 226,000 to 225,500.

    Claims taking procedures in Puerto Rico and in the Virgin Islands have still not returned to normal.

    us_ue_20180301

    The advance seasonally adjusted insured unemployment rate was 1.4 percent for the week ending February 17, an increase of 0.1 percentage point from the previous week’s unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending February 17 was 1,931,000, an increase of 57,000 from the previous week’s revised level. The previous week’s level was revised down by 1,000 from 1,875,000 to 1,874,000. The 4-week moving average was 1,920,000, a decrease of 6,250 from the previous week’s revised average. The previous week’s average was revised down by 250 from 1,926,500 to 1,926,250.

    us_ue_20180301

    Unadjusted Data

    The advance number of actual initial claims under state programs, unadjusted, totaled 195,897 in the week ending February 24, a decrease of 16,316 (or -7.7 percent) from the previous week. The seasonal factors had expected a decrease of 6,611 (or -3.1 percent) from the previous week. There were 212,829 initial claims in the comparable week in 2017.

    The advance unadjusted insured unemployment rate was 1.6 percent during the week ending February 17, unchanged from the prior week. The advance unadjusted number for persons claiming UI benefits in state programs totaled 2,255,253, a decrease of 5,387 (or -0.2 percent) from the preceding week. The seasonal factors had expected a decrease of 71,231 (or -3.2 percent) from the previous week. A year earlier the rate was 1.7 percent and the volume was 2,392,472.

    The total number of people claiming benefits in all programs for the week ending February 10 was 2,295,730, a decrease of 65,030 from the previous week. There were 2,533,393 persons claiming benefits in all programs in the comparable week in 2017.
    Extended benefits were available in Alaska and the Virgin Islands during the week ending February 10.
    Initial claims for UI benefits filed by former Federal civilian employees totaled 648 in the week ending February 17, a decrease of 61 from the prior week. There were 627 initial claims filed by newly discharged veterans, a decrease of 22 from the preceding week.
    There were 11,809 former Federal civilian employees claiming UI benefits for the week ending February 10, a decrease of 1,874 from the previous week. Newly discharged veterans claiming benefits totaled 8,451, a decrease of 2 from the prior week.

    The highest insured unemployment rates in the week ending February 10 were in the Virgin Islands (9.6), Alaska (3.8), Puerto Rico (3.4), New Jersey (3.0), Connecticut (2.9), Montana (2.8), Rhode Island (2.7), Massachusetts (2.6), Illinois (2.5), and Pennsylvania (2.5).
    The largest increases in initial claims for the week ending February 17 were in Puerto Rico (+496), New Jersey (+333), Rhode Island (+95), Arkansas (+87), and Alabama (+59), while the largest decreases were in Michigan (-4,820), Illinois (-2,031), New York (-998), California (-924), and Washington (-913).

    Employment and Training Administration, “Unemployment Insurance Weekly Claims Report“, 1 Mar 2018 (08:30) More

    flag_usa US: Personal Income and Outlays. Jan 18

    Press Release Extract [us_pce]

    Personal income increased $64.7 billion (0.4 percent) in January according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $134.8 billion (0.9 percent) and personal consumption expenditures (PCE) increased $31.2 billion (0.2 percent).

    Real DPI increased 0.6 percent in January and Real PCE decreased 0.1 percent. The PCE price index increased 0.4 percent. Excluding food and energy, the PCE price index increased 0.3 percent.

    The increase in personal income in January primarily reflected increases in wages and salaries and Social Security benefits that were partially offset by an increase in contributions for government social insurance, a subtraction in the calculation of personal income.

    The $17.0 billion decrease in real PCE in January reflected a decrease of $24.6 billion in spending for goods and a partially offsetting $4.8 billion increase in spending for services. Within goods, new motor vehicle sales was the leading contributor to the decrease.

    Personal outlays increased $33.7 billion in January. Personal saving was $464.4 billion in January and the personal saving rate, personal saving as a percentage of disposable personal income, was 3.2 percent.

    2017 Personal Income and Outlays

    Personal income increased 3.1 percent in 2017 (that is, from the 2016 annual level to the 2017 annual level), compared with an increase of 2.4 percent in 2016. DPI increased 2.9 percent in 2017 compared with an increase of 2.6 percent in 2016. In 2017, PCE increased 4.5 percent, compared with an increase of 4.0 percent in 2016.

    Real DPI increased 1.2 percent in 2017, compared with an increase of 1.4 percent in 2016. Real PCE increased 2.7 percent, the same increase as in 2016.

    Bureau of Economic Analysis, “Personal Income and Outlays. Jan 2018“, 1 Mar 2018 (08:30) More

    flag_usa US: IHS Markit US Manufacturing PMI. Feb 2018

    Press Release Extract [us_pmi]

    Key findings:

    • Growth in new business accelerates…
    • … but output expands at softer pace
    • Inflationary pressures intensify

    us_pmi_20180301

    February survey data signalled one of the strongest improvements in the health of the U.S. manufacturing sector seen over the past three years, led by a sharp expansion in new orders. Meanwhile, inflationary pressures intensified with rates of both input and output price inflation reaching multi-year highs. At the same time, business confidence towards output in the year- ahead improved, which supported further widespread job creation.

    The seasonally adjusted IHS Markit final U.S. Manufacturing Purchasing Managers’ Index™ (PMI™) registered 55.3 in February, down slightly from 55.5 in January. Although below January’s 34- month high, the overall improvement in operating conditions across the manufacturing sector was one of the strongest recorded since late-2014.

    Growth of manufacturing output remained solid in February, despite easing slightly to a three-month low. The sustained upturn in production was widely linked to greater client demand and increased order book volumes.

    New business received by manufacturers expanded at a faster pace in February, with growth reaching a 13-month high. The steep upturn was commonly attributed to the acquisition of new clients and successful marketing strategies. New business from abroad also rose further in February, albeit at a slightly slower pace than January.

    Improved inflows in new business and more favourable demand conditions were largely stated as key factors behind improved confidence among manufacturers in February. That said, the level of optimism was below the long-run series average.

    Inflationary pressures intensified in February. Input prices increased at the fastest pace since December 2012, reportedly driven by supplier shortages and greater global demand for inputs. Supply chain delays were among the highest seen over the past three years. Where possible, panellists reported that costs were passed onto clients through higher charges. Factory gate price inflation accelerated to the fastest for over four years.

    In response to sustained and strong growth in new work, goods producers increased their purchasing activity at a sharp rate in February. Despite this, pre- production inventories rose at the weakest pace for five months, as manufacturing firms reportedly used stocks to fulfil new orders.
    Finally, the rate of factory job creation strengthened to the third-fastest since June 2015 (after October and December 2017). Ongoing capacity pressures were also reflected in a further increase in the level of outstanding business.

    Comment

    Commenting on the final PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:

    “US factories are enjoying one of the best growth spells seen since 2014, boding well for the sector to make a solid contribution to GDP in the first quarter. The survey’s output index readings for the first two months of 2018 are indicative of the sector growing at an annualised rate of just under 3%. The most encouraging news was another surge in new order inflows, which helped boost optimism about the year ahead and drive further widespread job gains. Manufacturers are clearly in expansion mode, enjoying robust demand from home alongside rising export orders. Capacity is still being stretched, however, as indicated by widespread supply chain delays and the build-up of uncompleted orders at factories. Demand, in other words, is running ahead of supply, meaning pricing power is improving. Factory selling prices are consequently rising at the steepest rate for four years.”

    IHS Markit, “IHS Markit US Manufacturing PMI. Feb 2018“, 1 Mar 2018 (09:45) More

    flag_usa US: ISM Report on Business (PMI) – Manufacturing. Feb 2018

    Press Release Extract [us_ism_pmi]

    Economic activity in the manufacturing sector expanded in February, and the overall economy grew for the 106th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.

    The February PMI® registered 60.8 percent, an increase of 1.7 percentage points from the January reading of 59.1 percent.
    The New Orders Index registered 64.2 percent, a decrease of 1.2 percentage points from the January reading of 65.4 percent.
    The Production Index registered 62 percent, a 2.5 percentage point decrease compared to the January reading of 64.5 percent.
    The Employment Index registered 59.7 percent, an increase of 5.5 percentage points from the January reading of 54.2 percent.
    The Supplier Deliveries Index registered 61.1 percent, a 2 percentage point increase from the January reading of 59.1 percent.
    The Inventories Index registered 56.7 percent, an increase of 4.4 percentage points from the January reading of 52.3 percent.
    The Prices Index registered 74.2 percent in February, a 1.5 percentage point increase from the January reading of 72.7 percent, indicating higher raw materials prices for the 24th consecutive month.

    Comments from the panel reflect expanding business conditions, with new orders and production maintaining high levels of expansion; employment expanding at a faster rate to support production; order backlogs expanding at a faster rate; and export orders and imports continuing to grow faster in February. Supplier deliveries continued to slow (improving) at a faster rate. Price increases occurred across most industry sectors. The Customers’ Inventories Index indicates levels remain too low. Capital expenditure lead times improved by five days while production material supplier lead times extended four days during the month of February.

    Of the 18 manufacturing industries:

    • 15 reported growth in February, in the following order: Printing & Related Support Activities; Primary Metals; Machinery; Computer & Electronic Products; Petroleum & Coal Products; Nonmetallic Mineral Products; Plastics & Rubber Products; Fabricated Metal Products; Chemical Products; Transportation Equipment; Textile Mills; Miscellaneous Manufacturing; Paper Products; Electrical Equipment, Appliances & Components; and Food, Beverage & Tobacco Products.
    • 2 reported contraction during the period: Apparel, Leather & Allied Products; and Furniture & Related Products.

    Institute for Supply Management, “ISM Report on Business (PMI) – Manufacturing. Feb 2018“, 1 Mar 2018 (10:00) More

    flag_usa US: Construction Spending (Construction Put in Place). Jan 18

    Press Release Extract [us_const]

    Total Construction

    Construction spending during January 2018 was estimated at a seasonally adjusted annual rate of $1,262.8 billion, nearly the same as (±1.0 percent) the revised December estimate of $1,262.7 billion. The January figure is 3.2 percent (±1.3 percent) above the January 2017 estimate of $1,223.5 billion.

    us_const_20180301

    Private Construction

    Spending on private construction was at a seasonally adjusted annual rate of $962.7 billion, 0.5 percent (± 0.7 percent) below the revised December estimate of $967.9 billion. Residential construction was at a seasonally adjusted annual rate of $523.2 billion in January, 0.3 percent (±1.3 percent) above the revised December estimate of $521.8 billion. Nonresidential construction was at a seasonally adjusted annual rate of $439.6 billion in January, 1.5 percent (± 0.7 percent) below the revised December estimate of $446.2 billion.

    Public Construction

    In January, the estimated seasonally adjusted annual rate of public construction spending was $300.1 billion, 1.8 percent (±1.8 percent) above the revised December estimate of $294.8 billion. Educational construction was at a seasonally adjusted annual rate of $76.7 billion, 2.1 percent (±3.8 percent) above the revised December estimate of $75.2 billion. Highway construction was at a seasonally adjusted annual rate of $92.6 billion, 4.4 percent (±4.6 percent)* above the revised December estimate of $88.8 billion.

    US Census Bureau, “Construction Spending (Construction Put in Place). Jan 18“, 1 Mar 2018 (10:00) More

    Global: JPMorgan Global Manufacturing PMI. Feb 2018

    Press Release Extract [global_pmi]

    Global Manufacturing PMI™ Summary

    • Global PMI: 54.4 (Jan), 54.2 (Feb)
    • Output: 55.7 (Jan), 54.8 (Feb)
    • New Orders: 55.5 (Jan), 55.1 (Feb)
    • New Exports: 54.1 (Jan), 53.3 (Feb)
    • Employment: 53.0 (Jan), 53.0 (Feb)
    • Input Prices: 61.4 (Jan), 60.7 (Feb)
    • Output Prices: 54.1 (Jan), 53.9 (Feb)
    • Future Output: 64.4 (Jan), 64.7 (Feb)

    The global manufacturing sector continued to expand at a solid pace in February. Although the J.P.Morgan Global Manufacturing PMI™ – a composite index produced by J.P.Morgan and IHS Markit in association with ISM and IFPSM – fell for the second month running to 54.2, this was still one of the best readings since early-2011.

    February data indicated that the upturn remained broad- based in nature. PMI readings signalled expansion across the consumer, intermediate and investment goods sectors, and also in almost all of the nations covered by the survey. The exception was a slight contraction in Malaysia.

    Most of the larger industrial nations saw slight growth decelerations in February, including the USA, the euro area, Japan and the UK. Although the easing was marginally greater in the euro zone, it remained the strongest performing region overall. China, Brazil, Australia and Vietnam all saw their rates of growth improve, while Indonesia returned to expansion following contractions in the prior two months.

    Global manufacturing production and new orders continued to rise at robust rates in February, albeit the slowest in four months in both cases. International trade flows also improved, as highlighted by a further increase in new export orders. New export business rose for the nineteenth month running. Business optimism remained positive, climbing to its highest level since February 2015.

    The ongoing upturn in new business inflows exerted pressure on global manufacturing capacity, leading to another increase in backlogs of incomplete work. Outstanding business rose for the twenty-first successive month, although the pace of growth slipped to its lowest since last September.

    The combination of rising new orders, increased backlogs of work and improved business confidence encouraged manufacturers to take on additional staff in February. The rate of job creation was unchanged from January and almost matched December’s near seven-year high.

    Staffing levels were raised in almost all of the nations covered by the survey. The exceptions were job cuts in China, Russia and the Philippines. Price pressures meanwhile remained elevated, despite rates of increase in output charges and input costs easing over the month.

    Commenting on the survey, David Hensley, Director of Global Economic Coordination at J.P.Morgan, said:
    “The global manufacturing sector continued to achieve a solid pace of expansion in February, according to the latest PMI data. Nonetheless, the PMI, along with the latest data on production and expenditures, indicate that goods-sector expansion is moderating from the red-hot pace of late 2017.”

    J.P.Morgan and IHS Markit in association with ISM and IFPSM, “JPMorgan Global Manufacturing PMI. Feb 2018“, 1 Mar 2018 (11:00) More

    flag_usa US: Trump Announces Tariffs in Steel and Aluminium

    U.S. President Donald Trump announced on Thursday (about 1:40pm ET) that he would impose tariffs of 25% on imported steel and 10% on aluminium, in a move the administration said would protect U.S. industry, but which critics said would fail to boost jobs and risked stoking a trade war with China.

    Trump, speaking after a meeting with U.S. steel and aluminium makers said the duties would be formally announced next week.

    “We’re going to build our steel industry back and our aluminum industry back,” he said.

    News of the tariffs drove the stocks of U.S. domestic steel and aluminum makers sharply higher, but also hit sentiment on Wall Street due to the potential impact of higher costs on consumers.

    The move, which came after what one person with direct knowledge of the discussions described as a night of “chaos” in the White House due to frequent switching of positions in the administration, was sharply criticized by some senior Republican legislators.

    “Every time you do this, you get a retaliation. Agriculture is the number one target. I think this is terribly counterproductive for the agriculture economy,” said Senator Pat Roberts, who chairs the chamber’s agriculture committee.

    China has already threatened to curb imports of U.S. soybeans in retaliation, while the European Union has said it will consider action as well. China’s top trade official Lui He is in Washington for trade talks.

    After Trump’s statement, AK Steel Holding was up almost 12%, U.S. Steel Corp was up 8% and Nucor rose 3.6%. By contrast, industrial stocks such as Boeing fell, with traders citing tariffs, which would hit manufacturers’ costs.

    The administration says duties would protect U.S. industry, but critics say they would raise costs for industry and fail to deliver on a campaign pledge to boost domestic jobs.

    It had appeared unlikely that Trump would announce the tariffs on Thursday after a night of back and forth inside the administration.

    “There was a lot of movement within the past 12, 16 hours,” said the source who had knowledge of the discussions, but who declined to be named due to the sensitivity of the issue. “It was going to happen. It wasn’t going to happen and then it did happen.”

    The administration has also cited national security interests for its action, saying the United States needs domestic supply for its tanks and warships. Contrary to the action announced by Trump on Thursday, the Department of Defense had recommended targeted steel tariffs and a delay in aluminum duties.

    Although China only accounts for 2% of U.S. steel imports, its massive industry expansion has helped produce a global glut of steel that has driven down prices.

    Trade tensions between the United States and China have risen since Trump took office in 2017 and the administration is also pushing on what it regards as forced technology transfers to China.Reuters

    flag_japan Japan update

    Nikkei Japan Manufacturing PMI. Feb 2018

    Press Release Extract [jp_pmi]

    Key points:

    • Headline PMI signals solid improvement
    • Employment rises at sharpest pace in 11 years
    • Output price inflation remains relatively marked

    jp_pmi_20180301

    The health of the Japanese manufacturing sector continued to improve during February, sustaining an upward trend that has been apparent for the past 18 months. A broad-based rise in new orders underpinned a solid upturn in production and an 11- year high in the rate of job creation. However, firms noted difficulties in acquiring additional raw materials due to shortages and delayed deliveries. In turn, backlogs of work increased, prompting firms to use inventories to meet demand. Input costs rose sharply in February, encouraging firms to raise selling charges to a relatively marked extent.

    The headline Nikkei Japan Manufacturing Purchasing Managers’ Index™ (PMI)® – a composite single-figure indicator of manufacturing performance – edged slightly lower to 54.1 in February, from 54.8 in January. This was consistent with a solid, albeit weaker, rate of improvement in business conditions for Japanese manufacturers.

    Output continued along an expansionary path during February, however the rate of growth slowed for the first time since July 2017 to a four-month low. Nonetheless, firms increased production during February in line with greater new business inflows. New order growth was strong overall, despite easing. Similarly, new business from abroad rose to a weaker extent following January’s 92-month high. China and the US were cited as sources of foreign demand.

    With the upturns in output and new orders continuing, firms enhanced operating capacities by taking on more staff in February. In fact, the rate of job creation accelerated to an 11-year high. Firms noted that forecasts of further output growth had encouraged them to increase employment. That said, higher staff levels did not prevent backlogs of work from rising. Anecdotal evidence suggested that greater volumes of new business and delayed deliveries from suppliers had been contributing factors. Average lead times lengthened markedly in February and to the sharpest extent in 81 months, signalling intensified pressures on supply chains. Robust demand conditions also forced firms to use post-production inventories to fulfil incoming orders.

    Amid difficulties in obtaining inputs from suppliers, firms raised their stocks of purchases. The rate of accumulation quickened marginally to the joint- fastest pace in 25 months, on a par with May 2017.

    On the price front, input costs increased sharply and for a sixteenth consecutive month. Higher prices for oil-related products were widely reported by panellists. That said, the rate of inflation softened on that seen in January. Consequently, firms raised selling prices in an effort to pass part of the higher cost burden onto their customers. The rate of output price inflation, albeit weaker, remained relatively strong.

    Manufacturers retained an optimistic outlook towards output over the coming 12 months. Expectations of a stronger Japanese economy, Olympic-Games related demand and new client wins were all cited as reasons to be confident.

    Comment:

    Commenting on the Japanese Manufacturing PMI survey data, Joe Hayes, Economist at IHS Markit, which compiles the survey, said:

    “The trend of building momentum in the Japanese manufacturing sector came to an end in the latest PMI survey period. Output growth slowed for the first time since July 2017, while both domestic and foreign demand rose to lesser extents. Nonetheless, sentiment in the sector remained upbeat, as firms hired additional staff at the quickest rate in 11 years amid expectations that the Japanese economy would continue along an expansionary path. The PMI Output Prices Index, despite falling, signalled a relatively sharp rate of inflation during February. A combination of supply-side pressures, particularly raw material shortages and prolonged delivery times, and strong demand supported firms to raise factory gate charges. That said, the marked year-to-date appreciation of the yen could provide downward cost pressures for manufacturers, opening the door for disinflation to creep in to consumer prices, particularly if demand pressures ease further.”

    IHS Markit, “Nikkei Japan Manufacturing PMI. Feb 2018“, 1 Mar 2018 More

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    flag_china China update

    Caixin China Manufacturing PMI. Feb 2018

    Press Release Extract [cn_pmi]

    Key Points:

    • Softer rises in production and buying activity
    • Total new work expands at slightly faster, but still modest, pace
    • Input prices continue to rise faster than output charges

    cn_pmi_20180301

    Business conditions continued to improve across China’s manufacturing sector in February. Although growth in production softened from that seen in January, total new work expanded at a slightly faster pace. Meanwhile, companies continued to shed staff as part of efforts to reduce costs, which contributed to a further rise in the level of outstanding work. Although the rate of input price inflation eased further in February, it remained sharp overall and remained much stronger than that seen for output charges. Business sentiment remained strongly positive in February, with the degree of optimism reaching an 11-month high.

    Adjusted for seasonal factors, including the Chinese New Year, the headline Purchasing Managers’ Index™ (PMI™) – a composite indicator designed to provide a single-figure snapshot of operating conditions in the manufacturing economy – edged up to 51.6 in February, from 51.5 in January, to signal a further improvement in the health of the sector. Though only modest, the latest reading signalled the strongest improvement in operating conditions for six months.

    Manufacturing output in China continued to rise in February, albeit at a modest pace that was slightly softer than seen at the start of the year. According to panellists, production volumes rose due to greater amounts of new work. In contrast to the trend for output, growth in new orders quickened since January. This was despite new export sales rising to the softest extent for three months.

    February data signalled a further drop in Chinese manufacturing employment as a number of firms sought to reduce costs through the implementation of down-sizing measures. Despite quickening slightly since January, the rate of job shedding remained marginal, however. Reduced staffing levels and higher new orders led backlogs of work to accumulate again, albeit at a weaker pace than seen at the start of the year.

    Purchasing activity continued to increase in February, albeit modestly. Nonetheless, the sustained increase in buying activity underpinned the fastest rise in stocks of purchases for just over a year-and-a-half. Inventories of finished items also rose in February, following an eight- month sequence of decline.

    The amount of time taken for inputs to be delivered to manufacturers continued to increase, albeit modestly, with some reports linking delays to poor weather conditions.

    Input prices continued to rise sharply, despite the rate of inflation easing to a seven-month low. Panellists widely attributed greater cost burdens to higher raw material prices. As a result, firms raised their selling prices again in February, albeit at a modest rate that was similar to that seen in January.

    Finally, business confidence strengthened to its highest level for nearly a year in February. Positive expectations towards the 12-month outlook were widely supported by upcoming product releases and expectations that client demand will continue to improve over the year ahead.

    Comment

    Commenting on the China General Manufacturing PMI™ data, Dr. Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group said:

    “The Caixin China General Manufacturing Purchasing Managers’ Index (PMI) for February stood at 51.6, up slightly from the previous month. Within the headline composite index, the output and employment indices subsided, and the new orders index was up slightly, reflecting stable demand that was slightly stronger than output. Under those conditions, the index for output prices stopped declining and rose slightly, and the input prices index came down at a gradual rate.

    “The stocks of finished products and stocks of purchases indices on average showed increases in the range that indicates economic expansion, reflecting that companies were making active preparations to start work in March. This was also reflected in a rise for the future output index.

    “For now, the durability of the Chinese economy will persist. Looking ahead, whether demand generated from the beginning of work in March will gain strength will be key in determining China’s economic direction for 2018.”

    IHS Markit, “Caixin China Manufacturing PMI. Feb 2018“, 1 Mar 2018 More

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