Mon 5 Mar 2018


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In Portfolioticker today

read_this Hey Jarvis, how did we go today?

Today at the stock market

bull/bearU.S. stocks rallied as fears of a global trade war ebbed with investors betting that President Trump would back down on his threat to impose hefty tariffs on steel and aluminium imports. Strategists also cited rising oil prices and ebbing concerns after an Italian election for a relief rally in the 3 major U.S. equity indexes.

  • The S&P 500 index rose 29.69 points, or 1.10%, to 2,720.94
  • The Dow Jones Industrial Average rose 336.7 points, or 1.37%, to 24,874.76
  • The Nasdaq Composite index added 72.84 points, or 1%, to 7,330.71
  • Advancing issues outnumbered declining ones on the NYSE by a 2.82-to-1 ratio; on Nasdaq, a 2.20-to-1 ratio favored advancers.
  • The S&P 500 posted 12 new 52-week highs and four new lows; the Nasdaq Composite recorded 113 new highs and 20 new lows.
  • Volume on U.S. exchanges was 6.91 billion shares, compared to the 8.3 billion average over the last 20 trading days.

All 11 S&P sectors rose, and the biggest drivers were information technology, which rose 0.9% and the financial sector, which rose 1.4%. Facebook, Amazon, Netflix and JPMorgan provided the biggest boosts from single stocks.

The energy sector ended up 1.1% as oil prices rose on forecasts for robust oil demand growth and concerns output from OPEC producers would grow at a much slower pace in coming years.

The utilities sector was the biggest percentage gainer with a 1.95% increase followed by the financial sector’s 1.4% gain.

Investors started to eye Trump’s threat as a negotiating tool after he tweeted that Canada and Mexico could avoid his proposed tariffs if they ceded ground in the North American Free Trade Agreement (NAFTA) talks.

A lack of specific retaliatory measures from other countries was also reassuring, said Mona Mahajan, U.S. investment strategist, Allianz Global Investors in New York.

“It felt like (Trump) revealed some of his cards with that Twitter comment. I don’t think it’s a coincidence that came out as the latest round of NAFTA talks were concluding,” said Mahajan.“Hopefully this becomes a non-event and we’re back to focusing on the economy and rates.”

Trump’s announcement last week of a plan to slap import tariffs of 25% on steel and 10% on aluminium caused the S&P to fall as much as 2% on Thursday.

Art Hogan, chief market strategist at B. Riley FBR in New York, said the administration“sees the stock market as a report card for success and markets have so far said this trade war is not a good idea.”

Investors were also watching the aftermath of Italy’s election which registered a strong showing for anti-establishment parties though with no group able to form a stable government.

“The fact we didn’t get riots in the street or a call for a Brexit-type move reassured people,” Allianz’s Mahajan said.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) 2,720.94 +1.10% 2,673.61 +1.77%
DJIA INDU 24,874.76 +1.37% 24,719.22 +0.62%
NASDAQ IXIC 7,330.70 +1.00% 6,903.39 +6.18%

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 3.291 +0.73% 3.068 +7.28%
Valuation Rate USD/AUD 0.78162 +0.06% 0.78528 -0.47%
AUD-denominated Index AUD 4.212 +0.66% 3.909 +7.77%

Portfolio stock prices

Amazon closed on a record high of $1,523.61, beating its 26 Feb 2018 record of $1,521.95.

Stock Ticker Today Change 31 Dec 17 YTD
Alphabet A GOOGL $1,094.76 +0.97% $1,053.00 +3.96%
Alphabet C GOOG $1,090.93 +1.11% $1,045.65 +4.33%
Apple AAPL $176.82 +0.34% $169.23 +4.48%
Amazon AMZN $1,523.61 +1.55% $1,169.54 +30.27%
Ebay EBAY $43.19 +0.55% $37.76 +14.38%
Facebook FB $180.40 +2.14% $176.46 +2.23%
PayPal PYPL $79.07 +0.25% $73.61 +7.41%
Twitter TWTR $34.58 +4.78% $24.01 +44.02%
Visa V $121.88 +0.91% $114.02 +6.89%
VMware VMW $118.24 +1.63% $125.32 -5.65%

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) rose 0.1%, ending a 2-day slide.
The euro rose 0.1% to USD 1.2330, its third advance in a row.
Britain’s GBP rose 0.3% to USD1.3842.
Japan’s JPY fell 0.4% to 106.19 per USD.

The yield on 10-year Treasuries rose 2 basis points to 2.88%.
Germany’s 10-year yield fell 1 basis point to 0.64%.
Britain’s 10-year yield rose 2 basis points to 1.495%.
Bloomberg

AUD

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

Oil and Gas Futures

Crude prices rose on Monday along with the U.S. stock market on forecasts for robust oil demand growth and concerns that output from OPEC producers would grow at a much slower pace in coming years.

Oil prices, which were flat earlier in the day, started rising along with U.S. stocks. The S&P 500 Index .SPX was up over 1 percent shortly before the close of trading.

“Today’s spike in the equities was a large driver behind today’s (oil) price recovery,” Jim Ritterbusch, president of Chicago-based energy advisory firm Ritterbusch & Associates, said in a report.

Analysts also said prices were propped up by“bullish comments” from ministers from the Organization of the Petroleum Exporting Countries and other global industry players at the CERAWeek conference in Houston, the largest energy conference, on Monday.

Abhishek Kumar, senior energy analyst at Interfax Energy’s Global Gas Analytics in London, said comments about“Venezuela’s deteriorating oil-production profile, together with prospects for strong compliance with the OPEC-led output-cut agreement, (were) supportive of oil prices.”

Ecuador’s oil minister Carlos Perez said Venezuela’s oil production was running 1.5 million barrels per day (bpd) short of its historic output. Speaking on the sidelines of the CERAWeek conference, he noted it was something that the country must address itself.

OPEC Secretary General Mohammad Barkindo and other OPEC officials are expected to hold a dinner on Monday with U.S. shale firms on the sidelines of the conference.

Suhail Mohamed Al Mazrouei, the United Arab Emirates oil minister and OPEC’s current president, said on Sunday that the cartel had not discussed rolling over production cuts next year.

“We feel there is still market overhang,” Al Mazrouei said, adding“there are no talks about (extending cuts into 2019) at this stage.”

OPEC and other major producers agreed to cut combined output by about 1.8 million bpd to drain a global oil glut. The agreement began in January 2017 and runs through the end of this year.

Also on Monday, the International Energy Agency, which advises industrialized nations on energy policies, said it expected annual global oil demand growth to average a fairly robust 1.1 percent to 2023 and noted that OPEC would fail to significantly increase its production capacity.

To meet growing demand, IEA said U.S. shale oil output was set to surge over the next five years, stealing market share from OPEC producers and moving the United States, once the world’s top oil importer, closer to self sufficiency.Reuters

Futures prices

Prices are as at 15:50 ET

  • NYMEX West Texas Intermediate (WTI): $62.62/barrel +2.24% Chart
  • ICE (London) Brent North Sea Crude: $65.57/barrel +1.86% Chart
  • NYMEX Natural gas futures: $2.70/MMBTU +0.33% Chart

flag_australia AU: Commonwealth Bank Services PMI. Feb 2018

Press Release Extract [au_psi]

Key Findings:

Business activity in the Australian service sector rose during February, with the rate of growth quickening since January. New order growth accelerated to a seven month high, with the favourable demand environment encouraging firms to pass on higher cost burdens to their clients through greater output prices. Meanwhile, the rate of job creation remained weak relative to the series trend amid reports of increased labour costs.

au_psi_20180305

Summary

The headline figure derived from the survey is the Commonwealth Bank of Australia Services Business Activity Index, which is designed to provide timely indications of changes in business activity in the Australian service sector. Readings above 50.0 signal an improvement in business activity on the previous month while readings below 50.0 show deterioration.

The seasonally adjusted Business Activity Index rose to 54.2 in February from 53.8 in January, indicating a solid and accelerated rate of service sector output growth.

Panellists noted that improved labour productivity and higher new order inflows supported the upturn in business activity. New business opportunities reportedly arose from successful advertising and new contract wins. Overall, the rate of new order growth was strong and accelerated from January’s low to the highest since July 2017.

In turn, capacity pressures intensified during the latest survey period. The rate of backlog accumulation was solid and faster than that observed in the opening month of 2018.

A combination of increased order book volumes and backlogs of work encouraged firms to enhance operating capacities by hiring extra staff. That said, the rate of job creation remained subdued in the context of historical survey data.

On the price front, panellists reported that suppliers had increased their charges and that higher wages had driven up labour costs. Companies also mentioned greater fuel prices. Consequently, input price inflation accelerated to a sharp pace. However, firms took advantage of strong demand conditions and passed on higher cost burdens to customers.

Lastly, businesses retained a high degree of confidence in February, with precisely 64% of the survey panel expecting output to rise in the coming 12 months. Firms attributed their optimistic outlook to new client wins and marketing initiatives.

Commonwealth Bank Composite PMI®

The Commonwealth Bank Composite Output Index is a GDP-weighted average of the Commonwealth Bank Manufacturing Output Index and the Commonwealth Bank Services Business Activity Index. It is designed to provide a timely indication of changes in business activity in the Australian private sector economy as a whole. Readings above 50.0 signal an improvement in business activity on the previous month, while readings below 50.0 show deterioration.

au_composite_pmi_20180305

The seasonally adjusted Commonwealth Bank Composite Output Index edged up fractionally to 54.3 in February from 54.2 in January, signalling a solid rate of private sector output growth that was broadly in line with that recorded at the start of the year.

Comment

Commenting on the Commonwealth Bank Services and Composite PMI data, CBA’s Chief Economist, Michael Blythe, said:“Solid growth in new orders continues to propel the services sector along at a decent pace. The very positive readings on business expectations suggests services firms see expansion continuing through 2018. Services firms continue to expand their labour forces but the rate of expansion is slowing and now sits below the survey average. There are some indications that the slowdown reflects difficulties in finding suitable labour and wages are lifting as a result. More broadly, capacity pressures persist and are finding outlets in faster growth of input and output prices.”

IHS Markit, “Commonwealth Bank Services PMI. Feb 2018“, 5 Mar 2018 (09:00 AEDT) More

flag_australia AU: Business Indicators. Dec 2017

Press Release Extract [au_abs]

Chain Volume Measures

The trend estimate for inventories remained relatively unchanged in the December quarter 2017. The seasonally adjusted estimate rose 0.2% this quarter.
The trend estimate for Manufacturing sales of goods and services rose 1.0% this quarter. The seasonally adjusted estimate fell 0.5% this quarter.
The trend estimate for Wholesale trade sales of goods and services fell 0.4% this quarter. The seasonally adjusted estimate fell 1.2%.

Current Price Measures

The seasonally adjusted estimate for company gross operating profits rose 2.2% in the December quarter 2017.
The seasonally adjusted estimate for wages and salaries rose 1.0% in the December quarter 2017.

Analysis by Industry

Total All Industries

In current prices, the trend estimate for company gross operating profits fell 0.2% this quarter. The seasonally adjusted estimate rose 2.2%. In current price terms, the trend estimate for wages and salaries rose 1.2% this quarter. The seasonally adjusted estimate rose 1.0%.

In volume terms, the trend estimate for total inventories remained relatively unchanged this quarter. The seasonally adjusted estimate rose 0.2%.

Mining

In current prices, the trend estimate for company gross operating profits fell 1.8% this quarter. The seasonally adjusted estimate rose 4.2%. In current price terms, the trend estimate for wages and salaries rose 1.4% this quarter. The seasonally adjusted estimate rose 1.3%.

In volume terms, the trend estimate for sales of goods and services rose 2.4% this quarter. The seasonally adjusted estimate fell 0.5%. In volume terms, the trend estimate for inventories fell 0.5% this quarter. The seasonally adjusted estimate rose 4.9%.

Manufacturing

In current prices, the trend estimate for company gross operating profits rose 0.4% this quarter. The seasonally adjusted estimate rose 9.5%. In current price terms, the trend estimate for wages and salaries rose 0.5% this quarter. The seasonally adjusted estimate fell 0.2%.

In volume terms, the trend estimate for sales of goods and services rose 1.0% this quarter. The seasonally adjusted estimate fell 0.5%. In volume terms, the trend estimate for inventories rose 1.2% this quarter. The seasonally adjusted estimate remained relatively unchanged.

Electricity, Gas, Water and Waste Services

In current prices, the trend estimate for company gross operating profits rose 4.6% this quarter. The seasonally adjusted estimate rose 4.7%. In current price terms, the trend estimate for wages and salaries rose 0.5% this quarter. The seasonally adjusted estimate rose 0.4%.

In volume terms, the trend estimate for sales of goods and services fell 1.2% this quarter. The seasonally adjusted estimate fell 1.9%. In volume terms, the trend estimate for inventories fell 0.9% this quarter. The seasonally adjusted estimate rose 4.1%.

Construction

In current prices, the trend estimate for company gross operating profits fell 2.0% this quarter. The seasonally adjusted estimate fell 2.9%. In current price terms, the trend estimate for wages and salaries rose 2.6% this quarter. The seasonally adjusted estimate rose 1.9%.

In volume terms, the trend estimate for sales of goods and services rose 1.7% this quarter. The seasonally adjusted estimate rose 1.8%.

Wholesale Trade

In current prices, the trend estimate for company gross operating profits rose 5.0% this quarter. The seasonally adjusted estimate rose 11.2%. In current price terms, the trend estimate for wages and salaries fell 0.5% this quarter. The seasonally adjusted estimate fell 0.8%.

In volume terms, the trend estimate for sales of goods and services fell 0.4% this quarter. The seasonally adjusted estimate fell 1.2%. In volume terms, the trend estimate for inventories fell 0.6% this quarter. The seasonally adjusted estimate fell 0.1%.

Retail Trade

In current prices, the trend estimate for company gross operating profits rose 1.9% this quarter. The seasonally adjusted estimate rose 4.9%. In current price terms, the trend estimate for wages and salaries rose 0.5% this quarter. The seasonally adjusted estimate rose 0.8%.

In volume terms, the trend estimate for sales of goods and services rose 0.7% this quarter. The seasonally adjusted estimate rose 1.0%. In volume terms, the trend estimate for inventories fell 0.5% this quarter. The seasonally adjusted estimate fell 0.5%.

Accommodation and Food Services

In current prices, the trend estimate for company gross operating profits rose 6.4% this quarter. The seasonally adjusted estimate rose 18.0%. In current price terms, the trend estimate for wages and salaries rose 1.9% this quarter. The seasonally adjusted estimate rose 1.9%.

In volume terms, the trend estimate for sales of goods and services rose 1.1% this quarter. The seasonally adjusted estimate rose 0.9%. In volume terms, the trend estimate for inventories fell 0.6% this quarter. The seasonally adjusted estimate fell 1.2%.

Transport, Postal and Warehousing

In current prices, the trend estimate for company gross operating profits fell 0.8% this quarter. The seasonally adjusted estimate fell 1.7%. In current price terms, the trend estimate for wages and salaries rose 1.2% this quarter. The seasonally adjusted estimate rose 1.7%.

In volume terms, the trend estimate for sales of goods and services fell 0.6% this quarter. The seasonally adjusted estimate fell 1.8%.

Information, Media and Communications

In current prices, the trend estimate for company gross operating profits fell 1.6% this quarter. The seasonally adjusted estimate fell 14.4%. In current price terms, the trend estimate for wages and salaries fell 0.6% this quarter. The seasonally adjusted estimate rose 0.9%.

In volume terms, the trend estimate for sales of goods and services rose 0.4% this quarter. The seasonally adjusted estimate rose 2.2%.

Financial and Insurance Services

In current prices, the trend estimate for company gross operating profits rose 1.9% this quarter. The seasonally adjusted estimate fell 15.5%. In current price terms, the trend estimate for wages and salaries rose 2.0% this quarter. The seasonally adjusted estimate rose 1.9%.

In volume terms, the trend estimate for sales of goods and services rose 1.1% this quarter. The seasonally adjusted estimate fell 1.9%.

Rental, Hiring and Hiring and Financial Services

In current prices, the trend estimate for company gross operating profits rose 1.9% this quarter. The seasonally adjusted estimate fell 15.5%. In current price terms, the trend estimate for wages and salaries rose 2.0% this quarter. The seasonally adjusted estimate rose 1.9%.

In volume terms, the trend estimate for sales of goods and services rose 1.1% this quarter. The seasonally adjusted estimate fell 1.9%.

Professional, Scientific and Technical Services

In current prices, the trend estimate for company gross operating profits fell 2.4% this quarter. The seasonally adjusted estimate fell 11.0%. In current price terms, the trend estimate for wages and salaries rose 2.1% this quarter. The seasonally adjusted estimate rose 0.2%.

In volume terms, the trend estimate for sales of goods and services rose 0.8% this quarter. The seasonally adjusted estimate rose 0.4%.

Administrative and Support Services

In current prices, the trend estimate for company gross operating profits rose 10.0% this quarter. The seasonally adjusted estimate rose 18.7%. In current price terms, the trend estimate for wages and salaries rose 0.2% this quarter. The seasonally adjusted estimate rose 0.9%.

In volume terms, the trend estimate for sales of goods and services rose 0.3% this quarter. The seasonally adjusted estimate fell 0.6%.

Education and Training Services

In current price terms, the trend estimate for wages and salaries rose 1.0% this quarter. The seasonally adjusted estimate rose 1.5%.

Health Care and Social Assistance

In current price terms, the trend estimate for wages and salaries rose 1.0% this quarter. The seasonally adjusted estimate rose 1.8%.

Arts and Recreation Services

In current prices, the trend estimate for company gross operating profits fell 1.5% this quarter. The seasonally adjusted estimate fell 6.0%. In current price terms, the trend estimate for wages and salaries rose 1.1% this quarter. The seasonally adjusted estimate rose 1.4%.

In volume terms, the trend estimate for sales of goods and services rose 1.3% this quarter. The seasonally adjusted estimate rose 2.8%.

Other Services

In current prices, the trend estimate for company gross operating profits fell 0.5% this quarter. The seasonally adjusted estimate fell 3.2%. In current price terms, the trend estimate for wages and salaries rose 1.6% this quarter. The seasonally adjusted estimate rose 0.7%.

In volume terms, the trend estimate for sales of goods and services rose 1.6% this quarter. The seasonally adjusted estimate rose 2.0%.”

Australian Bureau of Statistics, “5676.0 Business Indicators. Dec 2017“, 5 Mar 2018 (11:30 AEDT) More

flag_europe EU: Retail Trade. Jan 2018

Press Release Extract [eu_trade]

In January 2018 compared with December 2017, the seasonally adjusted volume of retail trade decreased by 0.1% in both the euro area (EA19) and in the EU28, according to estimates from Eurostat, the statistical office of the European Union. In December 2017, the retail trade volume fell by 1.0% in the euro area and by 0.9% in the EU28.

eu_retail_20180305

In January 2018 compared with January 2017, the calendar adjusted retail sales index increased by 2.3% in the euro area and by 2.7% in the EU28.

Monthly comparison by retail sector and by Member State

The 0.1% decrease in the volume of retail trade in the euro area in January 2018, compared with December 2017, is due to falls of 0.3% for non-food products and of 0.2% for “Food, drinks and tobacco”, while automotive fuel rose by 0.1%. In the EU28, the 0.1% decrease in the volume of retail trade is due to falls of 0.3% for “Food, drinks and tobacco” and of 0.2% for non-food products, while automotive fuel rose by 0.3%.

Among Member States for which data are available, the largest decreases in the total retail trade volume were registered in Estonia (-2.4), Belgium (-1.6%) and Malta (-1.4%), while the highest increases were observed in Latvia (+2.1%), Finland (+1.3%), Hungary (+1.1%) and Austria (+0.7%).

Annual comparison by retail sector and by Member State

The 2.3% increase in the volume of retail trade in the euro area in January 2018, compared with January 2017, is due to rises of 3.8% for non-food products, of 0.8% for “Food, drinks and tobacco” and of 0.2% for automotive fuel. In the EU28, the 2.7% increase in retail trade volume is due to rises of 4.2% for non-food products, of 1.7% for automotive fuel and of 0.6% for “Food, drinks and tobacco”.

Among Member States for which data are available, the highest increases in the total retail trade volume were registered in Romania (+11.0%), Hungary (+7.5%), Latvia (+7.2%) and France (+6.3%), while decreases were observed in Estonia (-0.9%) and Belgium (-0.2%).

Eurostat, “January 2018 compared with December 2017: Volume of retail trade down by 0.1% in both euro area and EU28“, 5 Mar 2018 More

flag_europe EU: IHS Markit Eurozone Composite PMI. Feb 2018

Press Release Extract [eu_psi]

Key findings:

  • Final Eurozone Composite Output Index: 57.1 (Flash: 57.5, January Final: 58.8)
  • Final Eurozone Services Business Activity Index: 56.2 (Flash: 56.7, January Final: 58.0)

eu_psi_20180305

Although pulling back from January’s near 12-year high to a four-month low in February, the rate of output growth in the euro area remained robust. Manufacturers and service providers saw continued strong inflows of new business, while job creation and price pressures also remained elevated.

The final IHS Markit Eurozone PMI® Composite Output Index posted 57.1 in February, down from January’s near 12-year high of 58.8, but well above the series average of 53.0. The headline index has signalled expansion in each of the past 56 months, although the latest reading was slightly below the flash estimate of 57.5.

The manufacturing sector again registered stronger output growth than services. Both sectors also continued to enjoy the best periods of expansion for seven years, despite seeing rates of increase in output and new orders easing across the board in February.

By country, rates of output growth were solid despite mostly slowing since January. Germany (three-month low) topped the rankings, followed by France (five-month low) and then Spain (eight- month high). Rates of expansion in Ireland and Italy slipped to four- and three-month lows respectively.

The level of new business in the euro area economy expanded solidly in February. Backlogs of work subsequently rose, indicating that firms on balance continued to lack sufficient capacity to meet demand. However, rates of increase in new and outstanding business both eased to six-month lows.

Business optimism remained elevated in February, staying close to January’s eight-month high. The combination of robust current growth and expected future expansion encouraged further job creation. Staffing levels increased to one of the greatest extents over the past seven years, albeit less so than in January. Employment rose across the nations covered, with accelerations in France and Spain.

Price pressures remained elevated in February, despite rates of increase in costs and output charges both moderating. All of the nations covered saw both input costs and selling prices continue to rise.

Services

The euro area service sector saw growth of business activity, new orders and employment all lose momentum in February.

The final IHS Markit Eurozone PMI® Services Business Activity Index posted a three-month low of 56.2, down from January’s near ten-and-a-half year high of 58.0 and the flash estimate of 56.7. The headline index remained well above its long- run average of 53.2, however, and has signalled expansion for 55 consecutive months.

National PMI data pointed to broad-based growth, with services output rising in all of the countries covered during February. Rates of expansion eased in Germany, Italy and Ireland (all three- month lows) and France (four-month low). Spain saw growth pick-up to its highest since last July.

The increase in new business at euro area service providers also remained solid, albeit the weakest in six months. This underpinned rising business confidence, with the degree of positive sentiment improving to its second-highest during the past seven years. Optimism strengthened in Germany, France and Ireland, but eased in Italy and Spain.

Growth in new business remained sufficient to test capacity, leading to a further increase in backlogs of work. Outstanding business rose for the twenty- first month in a row, albeit to the least marked extent since last August.

The combination of rising order inflows and work-in- hand encouraged job creation in February. Employment rose for the fortieth month in a row, with the latest pace of increase only marginally below the decade highs seen through November 2017 to January this year. Rates of job creation accelerated in France (three-month high) and Spain (six-month high), but eased elsewhere.

Price inflationary pressures moderated in February. Input costs rose at the slowest pace since November last year, while output charges increased at a rate only marginally below January’s nine-and-a-half year high.

Comment

Chris Williamson, Chief Business Economist at IHS Markit said:

“The eurozone economy looks to have hit a speed bump in February after a stellar start to the year. It’s too early to read too much into the February fall in the PMI, and some pull-back from January’s high was always on the cards. It’s more appropriate to look at the elevated levels still being recorded by the surveys. So far this year, the PMI is indicating that the eurozone is on course for the strongest quarterly expansion for 12 years, consistent with GDP rising at a buoyant quarterly rate of 0.8-0.9%.

“The upturn also remains as broad as it is strong. Italy is set for its best quarter for 12 years while Germany is enjoying the steepest growth for seven years so far this year. French growth remains strong despite easing slightly since the final quarter of last year, and Spain is set for its best quarter since the strong upturn seen in the spring of 2017.

“It’s also worth noting that there was some evidence of adverse weather affecting businesses in the northern regions, and there’s evidence of capacity constraints limiting growth. The latter suggests that even a dip in the PMI could be hawkish from a monetary policy perspective, especially given the elevated levels of both the output and price indices from the survey.

“Inflationary pressures are more varied, however, with Germany seeing an especially strong upward trend in prices while France and Italy are notable in seeing companies report greater difficulties in passing higher costs on to customers.”

IHS Markit Economics, “Eurozone Composite PMI. Feb 2018“, 5 Mar 2018 More

flag_usa US: IHS Markit US Services PMI. Feb 2018

Press Release Extract [us_psi]

Key findings:

  • Output growth quickens to sharp rate
  • Upturn in new business strongest since March 2015
  • Input price inflation accelerates to fastest since June 2015

us_psi_20180305

Business activity across the U.S. service sector expanded sharply in February, according to the latest PMI data. The upturn in output accelerated to the fastest since August 2017. In addition, greater client demand led to a steep rise in new business, which rose at the strongest pace in almost three years. Capacity pressures intensified as a result of the upswing in demand, with backlogs of work accumulating to the greatest extent since March 2015.

Meanwhile, rates of both input and output price inflation accelerated, with the former reaching the fastest since June 2015.

The seasonally adjusted final IHS Markit U.S. Services Business Activity Index registered 55.9 in February, up from 53.3 in January. Following a nine-month low in the previous survey period, the rate of expansion in business activity picked up to the fastest since August 2017. Service providers generally attributed the sharp rise in output to greater client demand.

More favourable demand conditions drove the latest rise in new business, with panellists linking the upturn to the acquisition of new clients and investment in new facilities. Moreover, the rate of growth accelerated for the second consecutive month to the quickest in almost three years.

On the prices front, cost burdens faced by service providers continued to rise in February. The rate of input price inflation accelerated to the fastest since June 2015. Where higher input costs were reported, panellists commonly linked this to higher fuel and raw material prices.

Meanwhile, amid larger cost burdens and greater client demand, average charges also rose further as firms protected margins. Moreover, the pace of inflation quickened to the sharpest for five months.

In line with expansions in output and new business, firms stepped up their hiring in February. Higher employment levels were commonly attributed to greater capacity requirements, with the latest increase in payroll numbers reaching a six-month high.

Capacity pressures were also reflected in a solid rise in the level of outstanding business. The rate of order book accumulation strengthened for the third successive month to reach the highest in almost three years.

Finally, business expectations towards the year ahead outlook remained elevated in February. The degree of optimism reached a 13-month high, with a number of panel members linking confidence to upcoming marketing campaigns and more favourable domestic economic conditions.

IHS Markit Final U.S. Composite PMI™

The final seasonally adjusted IHS Markit U.S. Composite PMITM Output Index rose to 55.8 in February, from 53.8 in January. Despite the manufacturing sector registering a slightly slower output expansion, private sector growth was driven by service providers who signalled a sharp upturn in business activity.

us_composite_pmi_20180305

The overall increase in output the joint-strongest since November 2015.

The composite index is based on original survey data from the IHS Markit U.S. Services PMI and the IHS Markit U.S. Manufacturing PMI.

Comment

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

“A surge in service sector activity comes as welcome news after a disappointing couple of months, especially is it was accompanied by further robust manufacturing growth in February. So far, the two PMI surveys point to the economy expanding at a steady 2.5% annualised rate in the first quarter.

“With growth of new orders across the two sectors collectively growing at the fastest rate for three years, March could also prove to be a good month for business activity, rounding off a solid opening quarter or the year. Capacity is clearly being strained by the upturn in demand, as indicated by the largest build-up of uncompleted orders for nearly three years and reports of increasingly stretched supply chains.

“Encouragingly, business optimism about the year ahead has risen to one of the highest seen over the past three years, suggesting firms will remain in expansion mode to take advantage of the upturn. Hiring and business investment should therefore continue to rise in coming months. The concern is that prices continue to rise as demand outstrips supply. Average prices charged for goods and services showed the largest monthly rise since September 2014, which is likely to feed through to higher consumer price inflation.”

IHS Markit, “US Services PMI. Feb 2018“, 5 Mar 2018 (09:45) More

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

Press Release Extract [us_ism_psi]

Key Points

  • The NMI® registered 59.5 percent, which is 0.4 percentage point lower than the January reading of 59.9 percent. This represents continued growth in the non-manufacturing sector at a slightly slower rate.
  • The Non-Manufacturing Business Activity Index increased to 62.8 percent, 3 percentage points higher than the January reading of 59.8 percent, reflecting growth for the 103rd consecutive month, at a faster rate in February.
  • The New Orders Index registered 64.8 percent, 2.1 percentage points higher than the reading of 62.7 percent in January.
  • The Employment Index decreased 6.6 percentage points in February to 55 percent from the January reading of 61.6 percent.
  • The Prices Index decreased by 0.9 percentage point from the January reading of 61.9 percent to 61 percent, indicating that prices increased in February for the 24th consecutive month.
  • According to the NMI®, 16 non-manufacturing industries reported growth.
  • The non-manufacturing sector reflected the second consecutive month of strong growth in February.
  • The decrease in the Employment Index possibly prevented an even stronger reading for the NMI® composite index.
  • The majority of respondents’ continue to be positive about business conditions and the economy.

NMI®

In February, the NMI® registered 59.5 percent, 0.4 percentage point lower than the 59.9 percent registered in January, indicating continued growth in the non-manufacturing sector for the 97th consecutive month. A reading above 50 percent indicates the non-manufacturing sector economy is generally expanding; below 50 percent indicates the non-manufacturing sector is generally contracting.

An NMI® above 49 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the February NMI® indicates growth for the 102nd consecutive month in the overall economy, and indicates expansion in the non-manufacturing sector for the 97th consecutive month.

Anthony Nieves, Chair of the Institute for Supply Management® (ISM®) Non-Manufacturing Business Survey Committee, commented: “The past relationship between the NMI® and the overall economy indicates that the NMI® for February (59.5 percent) corresponds to a 3.9 percent increase in real gross domestic product (GDP) on an annualized basis.”

Business Activity

ISM®’s Business Activity Index registered 62.8 percent in February, an increase of 3 percentage points from the January reading of 59.8 percent. This represents growth in business activity for the 103rd consecutive month. Fifteen industries reported increased business activity, and two industries reported decreased activity for the month of February. Comments from respondents include: “Increased consumer confidence” and “Business improving.”

The 15 industries reporting growth of business activity in February — listed in order — are: Educational Services; Utilities; Transportation & Warehousing; Finance & Insurance; Management of Companies & Support Services; Professional, Scientific & Technical Services; Health Care & Social Assistance; Public Administration; Real Estate, Rental & Leasing; Wholesale Trade; Other Services; Mining; Retail Trade; Construction; and Information. The two industries reporting a decrease in business activity in February are: Arts, Entertainment & Recreation; and Accommodation & Food Services.

New Orders

ISM®’s Non-Manufacturing New Orders Index registered 64.8 percent, an increase of 2.1 percentage points from the January reading of 62.7 percent. February represents growth in new orders for the 85th consecutive month, at a faster rate compared with January. Comments from respondents include: “New customers engaged and onboarded” and “New business gained.”

The 15 industries reporting growth of new orders in February — listed in order — are: Educational Services; Transportation & Warehousing; Utilities; Real Estate, Rental & Leasing; Management of Companies & Support Services; Construction; Finance & Insurance; Professional, Scientific & Technical Services; Mining; Wholesale Trade; Accommodation & Food Services; Other Services; Public Administration; Retail Trade; and Health Care & Social Assistance. The only industry reporting a decrease in business activity in February is Information.

Employment

Employment activity in the non-manufacturing sector grew in February for the 48th consecutive month. ISM®’s Non-Manufacturing Employment Index registered 55 percent, which reflects a decrease of 6.6 percentage points when compared to the January reading of 61.6 percent. Thirteen industries reported increased employment, and three industries reported decreased employment. Comments from respondents include: “New associates hired [due to] new business gained” and “Normal month-to-month fluctuations in staffing.”

The 13 industries reporting an increase in employment in February — listed in order — are: Other Services; Educational Services; Real Estate, Rental & Leasing; Health Care & Social Assistance; Management of Companies & Support Services; Wholesale Trade; Transportation & Warehousing; Retail Trade; Finance & Insurance; Construction; Public Administration; Information; and Professional, Scientific & Technical Services. The three industries reporting a reduction in employment in February are: Accommodation & Food Services; Utilities; and Mining.

Supplier Deliveries

Supplier deliveries were slower in February for the 26th consecutive month. The index registered 55.5 percent, which is the same reading registered in both December and January. A reading above 50 percent indicates slower deliveries, while a reading below 50 percent indicates faster deliveries. Comments from respondents include: “A couple of key suppliers are backlogged on orders” and “Trucking and production issues.”

The 10 industries reporting slower deliveries in February — listed in order — are: Wholesale Trade; Agriculture, Forestry, Fishing & Hunting; Transportation & Warehousing; Health Care & Social Assistance; Mining; Information; Professional, Scientific & Technical Services; Accommodation & Food Services; Construction; and Public Administration. The two industries reporting faster deliveries in February are: Management of Companies & Support Services; and Finance & Insurance. Six industries reported no change in February compared to January.

Inventories

ISM®’s Non-Manufacturing Inventories Index grew in February after a month of contraction, registering 53.5 percent, 4.5 percentage points higher than the 49 percent reported in January. Of the total respondents in February, 30 percent indicated they do not have inventories or do not measure them. Comments from respondents include: “Higher than expected ongoing demand” and “New customers require holding additional inventory”

The eight industries reporting an increase in inventories in February — listed in order — are: Wholesale Trade; Real Estate, Rental & Leasing; Utilities; Agriculture, Forestry, Fishing & Hunting; Health Care & Social Assistance; Transportation & Warehousing; Retail Trade; and Public Administration. The seven industries reporting decreases in inventories in February — listed in order — are: Construction; Information; Other Services; Finance & Insurance; Accommodation & Food Services; Professional, Scientific & Technical Services; and Mining.

Prices

Prices paid by non-manufacturing organizations for purchased materials and services increased in February for the 24th consecutive month. ISM®’s Non-Manufacturing Prices Index registered 61 percent, 0.9 percentage point lower than the 61.9 percent reported in January. Thirty percent of respondents reported higher prices, 64 percent indicated no change in prices paid and 6 percent of respondents reported lower prices.

The 16 non-manufacturing industries reporting an increase in prices paid during the month of February — listed in order — are: Agriculture, Forestry, Fishing & Hunting; Wholesale Trade; Mining; Construction; Management of Companies & Support Services; Real Estate, Rental & Leasing; Public Administration; Information; Professional, Scientific & Technical Services; Utilities; Retail Trade; Finance & Insurance; Accommodation & Food Services; Other Services; Transportation & Warehousing; and Health Care & Social Assistance. No industries reported a decrease in prices in February compared to January.

Backlog of Orders

ISM®’s Non-Manufacturing Backlog of Orders grew in February. The index registered 56 percent, which is 5.5 percentage points higher than the 50.5 percent reported in January. Of the total respondents in February, 39 percent indicated they do not measure backlog of orders.

The eight industries reporting an increase in order backlogs in February — listed in order — are: Construction; Finance & Insurance; Transportation & Warehousing; Professional, Scientific & Technical Services; Health Care & Social Assistance; Public Administration; Wholesale Trade; and Information. The four industries reporting a decrease in order backlogs in February are: Other Services; Management of Companies & Support Services; Retail Trade; and Mining.

New Export Orders

Orders and requests for services and other non-manufacturing activities to be provided outside of the U.S. by domestically based personnel grew in February for the 13th consecutive month at a faster rate. The New Export Orders Index registered 59.5 percent, which is 1.5 percentage points higher than the 58 percent reported in January. Of the total respondents in February, 63 percent indicated they either do not perform, or do not separately measure, orders for work outside of the U.S.

The 10 industries reporting an increase in new export orders in February — listed in order — are: Construction; Mining; Retail Trade; Agriculture, Forestry, Fishing & Hunting; Real Estate, Rental & Leasing; Finance & Insurance; Accommodation & Food Services; Professional, Scientific & Technical Services; Transportation & Warehousing; and Information. The only industry reporting a decrease in exports is Other Services.

Imports

The Imports Index reading of 50 percent is 4 percentage points lower than the 54 percent reported in January. Fifty-one percent of respondents reported that they do not use, or do not track the use of, imported materials.

The six industries reporting an increase in imports for the month of February — listed in order — are: Agriculture, Forestry, Fishing & Hunting; Retail Trade; Mining; Transportation & Warehousing; Health Care & Social Assistance; and Construction. The six industries reporting a decrease in imports in the month of February — listed in order — are: Other Services; Management of Companies & Support Services; Accommodation & Food Services; Information; Wholesale Trade; and Professional, Scientific & Technical Services.

Inventory Sentiment

The ISM® Non-Manufacturing Inventory Sentiment Index in February registered 61 percent, which is the same reading reported in January. This indicates that respondents believe their inventories are still too high at this time. In February, 24 percent of respondents said their inventories were too high, 2 percent of the respondents said their inventories were too low, and 74 percent said their inventories were about right.

The 10 industries reporting a feeling that their inventories were too high in February — listed in order — are: Management of Companies & Support Services; Wholesale Trade; Mining; Utilities; Construction; Information; Health Care & Social Assistance; Public Administration; Accommodation & Food Services; and Professional, Scientific & Technical Services. The only industry reporting a feeling that their inventories were too low in February compared with January is Other Services.

Institute for Supply Management, “Report on Business (PMI) – Non-Manufacturing. Feb 2018“, 5 Mar 2018 More

JPMorgan Global Services PMI. Feb 2018

Press Release Extract [global_psi]

The upturn in the global service sector gathered further momentum in February. Business activity rose at the fastest pace in almost three years, as new order inflows showed the steepest gain since September 2014. Job creation also strengthened, with employment increasing to the greatest extent in 33 months.

global_psi_20180305

The J.P.Morgan Global Services Business Activity Index rose to 54.8 in February, up from 54.1 in January. The headline index has now signalled expansion for 103 months in a row:

  • Output/Activity 54.1
  • New Business 55.0
  • Backlogs of Work 51.4
  • Input Prices 56.2
  • Output Charges 52.8
  • Employment 52.8
  • Future Activity 65.3

Business activity rose across the business, consumer and financial services categories in February. The financial services sector saw the sharpest increase in output, followed closely by business services, with rates of growth improving in both cases. The weakest expansion was registered in consumer services, which was the only sector to see growth slow over the month.

The upturn in world service sector output was led by Russia, the US and the euro area. The US saw its rate of expansion upshift to the second-highest in over two years, while growth in the eurozone remained elevated despite slipping to a three-month low. China (two-month low), the UK (four-month high), Australia and Russia (both two- month highs) also posted solid increases in output. Growth slowed in Japan and revived to a five-year high in Brazil, whereas contraction was signalled in India.

Incoming new orders expanded at a robust clip in February. This was a prime factor underlying a further improvement in business confidence, which rose to a 44- month high. Solid demand also led to an increase in backlogs of work, the nineteenth in as many months.

Conditions were sufficiently solid to encourage further jobs growth in February. The rate of increase in employment accelerated to a 33-month high, with increases signalled in almost all of the nations covered by the survey (Brazil being the exception). Faster expansions were seen in the US, the UK, France, Spain, India, Russia and Australia.

Price pressures intensified in February. Inflation of input costs and output charges both accelerated. Input prices rose to the greatest extent in over six-and-a-half years. Selling price inflation meanwhile hit a series-record high, mainly due to a sharp acceleration the US.

J.P.Morgan and IHS Markit in association with ISM and IFPSM, “Global Services PMI. Feb 2018“, 5 Mar 2018 (11:00) More

JPMorgan Global Composite PMI. Feb 2018

Press Release Extract [global_composite_pmi]

The rate of expansion in global economic output accelerated to a near three-and-a-half year high in February, as stronger growth in the service sector offset a slightly weaker upturn at manufacturers. The J.P.Morgan Global All-Industry Output Index rose to a 41-month high of 54.8 in February, up from 54.6 in January.

global_composite_pmi_20180305

The headline index has now signalled expansion for 65 successive months. Output index readings were identical for manufacturing and services, representing a four-month low for the former and 35-month high for the latter

  • Output 54.6
  • New Orders 55.2
  • Employment 52.9
  • Input Prices 57.6
  • Output Charges 53.2
  • Backlogs 51.9
  • Future Output 65.0

The upturn remained broad-based by sub-sector, with output rising across the six areas of economic activity covered by the survey in February. The fastest increases were in the business services, consumer goods and financial services categories, all of which saw growth pick up. Rates of expansion eased in the consumer services, intermediate goods and investment goods sectors.

Almost all of the nations covered registered an increase in economic output, the exception being a mild contraction in India. The euro area remained a bright spot, despite seeing its rate of expansion dip to a four-month low. The US saw a marked growth acceleration, while rates of expansion also improved in the UK, Brazil, Russia and Australia. Mild growth slowdowns were observed in China and Japan.
The level of incoming new business rose to the greatest extent since June 2014. This led to another increase in backlogs of work, which companies responded to by raising capacity.

Jobs growth has been registered throughout the past eight years. The latest rate of increase matched the ten-year highs achieved around the turn of the year. Employment rose in the US, the euro area, Japan, China, the UK, India, Russia and Australia.

The rate of input price inflation steadied at January’s six- and-a-half year high. Part of the increase in costs was passed on to clients in the form of higher charges. Output charges rose to the greatest extent in seven years, as a series-record increase in the service sector more than offset a mild moderation at manufacturers. Rates of increase in both price measures were (on average) steeper in developed nations compared to their emerging markets counterparts.

Commenting on the survey, David Hensley, Director of Global Economic Coordination at J.P.Morgan, said:

“The February PMI surveys signalled a further acceleration in the rate of expansion in global economic output. According to the PMI, growth hit a near three-and- a-half year high, as inflows of new business strengthened. The acceleration was mainly led by the service economy, as signs of growth slowdown from recent highs were observed in manufacturing. With economic conditions remaining solid overall, global growth should remain solid in coming months.”

J.P.Morgan and IHS Markit in association with ISM and IFPSM, “J.P.Morgan Global Manufacturing & Services PMI™. Feb 2018“, 5 Mar 2018 (11:00) More

flag_japan Japan update

Nikkei Japan Services PMI. Feb 2018

Press Release Extract [jp_psi]

Key points:

  • Business activity rises, albeit at weaker rate
  • Employment growth eases to three-month low
  • Level of positive sentiment falls

jp_psi_20180305

The upturn in Japanese service sector business activity was sustained during February. That said, the pace of growth was fractionally softer amid a slower rise in new business inflows. Backlogs of work rose for a second successive month, encouraging firms to hire more staff. In line with weaker output and new order growth, business optimism weakened.

Inflationary trends in both prices paid and prices charged by service providers continued during February. However, with the former rising faster than the latter, there was evidence of further margin erosion.
The headline index from the survey – the seasonally adjusted Business Activity Index – edged fractionally lower to 51.7 in February from 51.9 in January, thereby signalling a moderate and slower rate of output growth in the Japanese service sector.

Similarly, Japanese manufacturers expanded production at a weaker rate. Subsequently, the Nikkei Composite Output Index fell to 52.2 during February from 52.8 in January.

Underpinning the latest rise in service sector activity was a similar-sized gain in new business. New order receipts rose for a nineteenth successive month during February, however the rate of growth recorded was marginally slower. Despite a weaker rise in new business opportunities, backlogs of work were accumulated for the second month running. The extent of the increase was modest and fractionally softer than that seen in January. Firms responded to the demands of higher business activity by hiring more staff to enhance operating capacities. Employment has now risen in each of the past 14 survey periods. However, the rate of job creation was only slight and fell to a three-month low.

New orders placed with manufacturers rose solidly, leading to a further accumulation of backlogs of work. Confident that the upturn in demand will be sustained, manufacturing firms added to their payrolls at the sharpest pace in 11 years.

Expectations regarding future service sector business activity remained upbeat, in line with positive employment, output and demand trends. Business optimism was associated with successful marketing campaigns and increased workforce numbers. Nonetheless, the degree of optimism in the service sector eased to the joint-weakest since September 2017 (on a par with October 2017).

Cost burdens faced by Japanese service providers rose in February, continuing an inflationary trend which has been apparent since November 2012. Survey data indicated that the rise in costs was strong overall, despite easing. Panellists attributed higher operating expenses to greater food, fuel and labour costs.

Consequently, businesses raised output prices for a seventh month in succession. That said, the extent of the rise was modest and slower than that seen for input prices, indicating a squeeze on the profit margins of service providers.

Similar trends were observed in the manufacturing sector, with inflation rates for both input costs and output prices softer than in January.

Comment:

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

“The pace of expansion in Japanese service sector output was broadly unmoved in February, ticking fractionally lower overall. Demand pressures rose at a similar peg to output, meanwhile employment rose at a slower pace. Weaker job growth in tandem with a softer rise in new business appeared to concern Japanese service providers, as the degree of optimism deteriorated to a four-month low”.

“Softer inflationary trends were also apparent in February, with both prices paid and prices charged rising to slower extents. Panellists indicated that increased food and fuel prices remained a principle factor behind higher selling charges, as has been seen in official CPI statistics. With PMI data signalling weaker demand-pull pressures, there appears to be little incentive for businesses to substantially raise consumer prices in the immediate future. This supports the Bank of Japan to reiterate its dovish stance and allay fears of a possible unwind of ultra-loose monetary conditions.”

IHS Markit, “Nikkei Japan Services PMI. Feb 2018“, 5 Mar 2018 More

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flag_china China update

Caixin China General Services PMI. Feb 2018

Key points

  • Softer increases in activity across both the manufacturing and service sectors
  • New order growth slows at services companies, but picks up at manufacturers
  • Input price inflation subsides

cn_psi_20180305

Summary – Services and Composite PMI data

The Caixin China Composite PMI™ data (which covers both manufacturing and services) signalled a further strong rise in overall Chinese business activity in February, despite the pace of expansion softening since January. At 53.3 in February, the Composite Output Index fell only slightly from a seven-year record of 53.7 at the start of the year.

Activity continued to expand across both the manufacturing and service sectors in China during February, albeit at weaker rates than recorded at the beginning of the year. Nonetheless, growth in services activity held close to January’s 68-month record and remained solid overall, as shown by the seasonally adjusted Caixin China General Services Business Activity Index declining only slightly from 54.7 to 54.2 in February. Meanwhile, manufacturing output increased at a pace that, though modest, was the second-fastest seen in the past year.

While manufacturers registered a slightly stronger increase in new orders midway through the first quarter, growth in new business placed at services companies softened slightly. Nonetheless, sales rose solidly across the service sector overall, with a number of firms commenting that greater efforts to secure new clients and new projects had lifted sales. At the composite level, however, growth in new work edged down for the second month in a row.

Sustained job creation at service providers largely offset a decline in manufacturing headcounts during February, leaving overall employment little-changed from the previous month. Employment rose modestly at services companies, amid reports that rising business requirements had led firms to hire additional workers. In contrast, goods producers cut their payrolls for the fifty-second month running, albeit only slightly.

While manufacturers continued to report higher backlogs of work in February, the level of work-in-hand (but not yet completed) was broadly unchanged across the service sector. However, the rate of accumulation signalled by goods producers eased to the weakest in five months. Overall, composite unfinished business rose at a marginal pace that was the slowest since last September.

Chinese companies continued to report higher input costs in the latest survey period. The rate of input price inflation registered at manufacturing companies was sharp overall, despite softening to a seven-month low. Meanwhile, service providers saw a solid rise in cost burdens despite the pace of inflation easing from January’s 69-month record. Higher input prices were generally linked to greater costs for food, fuel, raw materials and salaries. However, softer rises across both sectors led composite input prices to increase at the slowest rate for six months.

Although cost burdens continued to rise strongly, services companies raised their charges at a modest pace that was only slightly stronger than that recorded in January. Manufacturers meanwhile increased their selling prices at a marginally quicker, albeit still modest, rate. The pace of composite output charge inflation therefore accelerated slightly in February, but was moderate overall.

Optimism towards the 12-month business outlook strengthened across both monitored sectors in February, with the highest level of positive sentiment registered across services companies. Nonetheless, confidence at manufacturers was at an 11-month high, which led to overall business expectations to be at their most positive since last June.

Comment

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

“The Caixin China General Services Business Activity Index came in at 54.2 for February, dipping 0.5 points from the previous month’s high. A drop in the new business index was most obvious, reflecting a cooling of strong demand for the services industry. Under those conditions, the input prices index declined from the previous month’s high, but the index for prices charged unexpectedly moved up, indicating the profitability of services business was moving in a positive direction. Along with this, the future output expectations index (reflecting services’ expectations for the next 12 months) saw an increase.

“The Caixin integrated output index came in at 53.3 for February, down from the previous month’s high, as manufacturing output and services business activity indices declined from the previous month. But manufacturing demand still remained stable, service industry prices rose towards convergence, and the stable condition of the macro economy didn’t waver.”

IHS Markit, “Caixin China General Services PMI™ – Growth of Chinese business activity eases slightly in February.” 5 Mar 2018 More

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