In Portfolioticker today
- Today at the stock market
- The portfolio today
- Energy: Oil and Gas Futures
- Spotify Begins Trading on NYSE
- AU: Commonwealth Bank Manufacturing PMI. Mar 2018
- AU: Internet Activity. Dec 2017
- AU: RBA Monetary Policy Decision
- EU: Eurozone Manufacturing PMI. Mar 2018
- Global Manufacturing PMI. Mar 2018
- Japan Update
- China Update
Today at the stock market
“The three major U.S. stock indexes ended higher after a choppy session on Tuesday as investors looked forward to earnings season while the S&P 500 pushed above a key support level and Amazon.com shares jumped on hopes that criticism from President Donald Trump would not translate to policy changes.
After a volatile session Amazon ended up being the biggest boost for Nasdaq. The White House said it wasn’t taking action even as Trump continued his attacks on the online retailer, according to a Bloomberg report.
Traders said they were heavily focused on technical levels after investors fled on Monday when the S&P 500 breached its 200-day moving average. The benchmark index pushed above that support level just ahead of the last hour of trading on Tuesday and stayed higher for the rest of the session.
“There was opportunity for sellers to break through the 200-day but that didn’t happen. Fundamentals are holding the stock market up. We’re on the verge of the earnings reporting season. That’s going to be a blockbuster,” said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.
Wall Street analysts expect S&P 500 earnings to increase 18.4% for Q1/2018, according to Thomson Reuters data. But some traders said technical sellers could still put pressure on stocks on Wednesday as the S&P’s closing level was still too close for comfort to 2590.76 – the 200-day moving average – and 2532.69 – its 9 Feb 2018 low.
“I don’t think we’re in the clear. Tomorrow morning will tell us. Every time we get a good rally the sellers come in. What we need is a two-day rally with a sustained buying pressure,” said Dennis Dick, head of markets structure, proprietary trader at Bright Trading LLC in Las Vegas.
After spending the day swinging between positive and negative territory the S&P 500’s technology sector, the biggest driver in the current bull market, ended up 1%.
Tesla Inc shares gained 6% after the electric automaker said it need not raise more capital this year and announced robust production numbers for its cheaper Model 3 sedans.
Amazon.com Inc shares ended up 1.5% at $1,392.05 though it was still well below its 13 Mar 2018 record of $1,617.54.
In its high-profile market debut, digital music provider Spotify Technology SA closed at $149.01, 12.9% higher than the $132 reference price set by the NYSE late on Monday, though well below its intraday high of $169 and its opening price of $165.90.
Viacom Inc fell 3.7% after Reuters reported that CBS Corp planned to make an all-stock offer that valued the media company below its current market valuation. CBS shares rose 4.2%. CNBC reported late Tuesday that CBS had submitted a bid for Viacom well below its market value.” Reuters
Reuters Comment: “As Wall Street sinks, Trump is his own worst enemy”
“As far as the stock market is concerned, U.S. President Donald Trump is, right now, his own worst enemy. The president – who frequently touted Wall Street’s rally following his 2016 election victory – was partly blamed for a sharp stock selloff on Monday that investors believe is likely to continue, deepening cracks in a nine-year-old bull run.
The selling was sparked by escalating fears of a trade war as China slapped tariffs on a host of U.S. goods as Trump prepares to impose tariffs of more than $50 billion on Chinese imports, and by Trump’s renewed criticism of Amazon.com Inc.
“The president’s behavior is now beginning to impact the capital markets – both the averages and individual equities,” said Doug Kass, president of Seabreeze Partners Management in Palm Beach, Florida.
Particularly worrisome to investors on Monday: more weakness in the tech sector, which led the market up in recent months, and a breach below a major S&P 500 technical level.
In a Twitter post, Trump attacked Amazon for a second time in three days over the pricing of its deliveries through the United States Postal Service and promised unspecified changes.
Amazon’s stock slumped 5.2% and led the S&P 500 and Nasdaq down, pressuring other high-growth, technology-related stocks, including Microsoft Corp, Apple Inc and Facebook Inc. Outcry in recent weeks over Facebook’s handling of data about its users has shaken the tech sector with fears of greater governmental oversight.
“(One) big factor is Trump further going after the tech sector, namely Amazon. It casts a shadow effectively around all of the tech sector,” said Tom di Galoma, managing director at Seaport Global Holdings in New York.
The selloff in technology-related stocks was seen as a particularly worrisome sign for investors who have banked on that sector continuing to drive the broader market.
“It’s very significant. Selling tech is not a sector rotation story, its a sell-the-market story,” said Michael Purves, chief global strategist at Weeden & Co in New York.
Technology stocks have been widely viewed in recent months as a “crowded trade” – with most investors having the same opinion, increasing the potential for a volatile selloff if sentiment changes.
“What we’ve learned over the past two weeks is just how overweight investors were in technology,” said Nicholas Colas, co-founder of Datatrek Research, New York.
Investors saw more selling pressure ahead, particularly after the S&P 500 .SPX dipped below a major technical level, the 200-day moving average, for the first time since Britain voted to leave the European Union in Jun 2016. The index closed at 2,582, for a year-to-date decline of 3.4%.
“We have been pounding on the 200-day for the last six sessions and now we’ve broken through,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas. There may be support around the 2,537 level, he said, “but then below that we may be looking at 2,500 or so again, which is pretty scary.”
In Trump’s first year as president, the S&P 500 surged 24% on bets he would boost the economy with fiscal spending, deregulation and deep tax cuts. Trump tweeted frequently about the stock market as it rallied through 2017. But since a selloff in February, he has been noticeably silent.
But this bull market has frequently staged swift recoveries, and some were poised for opportunity.
“I’m taking advantage of these markets and am heavily overweighted financials and banks. I didn’t buy today, we’re in freefall, but I might tomorrow,” said David Kotok, chairman and chief investment officer Of Cumberland Advisors in Sarasota, Florida.” Reuters
“Judging from his tweets, President Donald Trump appears to have the knives out for Amazon.com Inc. But inside the White House, there are no active discussions about turning the power of the administration against the company, according to five people familiar with the matter who spoke on condition of anonymity. None of the five people was aware of any ongoing discussion about turning Trump’s tweets into action against Amazon, not on the legal or regulatory fronts, or even regarding its reliance on the U.S. Postal Service, which has drawn the lion’s share of Trump’s wrath.
Trump expressed a desire to aides last summer to raise the Postal Service’s rates for delivering Amazon packages, one person said. His staff explained to the president that the Postal Service is an independent organization and its mail rates are set by a commission, the person said.
Aides also discussed antitrust options in light of the Amazon and Whole Foods Market Inc. merger, but never seriously considered any action because the Federal Trade Commission and Justice Department handle those matters independently.
Amazon posted its biggest intraday gain in a week, reversing an earlier decline, on news of the White House’s inaction. Trump’s attacks — five tweets on subjects from the Postal Service to taxes and retailing — weighed on the company’s shares, sinking its market value by as much as $55 billion over the past six days.
The president’s claim is unsubstantiated. While its contract with Seattle-based Amazon is confidential, the Postal Service has argued that its e-commerce services benefit the organization and its mail customers. It is legally prohibited from charging shippers less than its delivery costs. Further, taxpayers don’t directly support the Postal Service’s operations.
“Amazon has the money to pay the fair rate at the post office, which would be much more than they’re paying now,” Trump said to reporters Tuesday at the White House. The president claimed, citing an unidentified report, that the post office loses $1.47 each time it delivers a package for Amazon.
Amazon regularly uses the Postal Service to complete what’s called the “last mile” of delivery, with letter carriers dropping off packages at some 150 million residences and businesses daily. The company has a network of 35 “sort centers” where customer packages are sorted by zip code, stacked on pallets and delivered to post offices for the final leg of delivery.
David Vernon, an analyst at Bernstein Research who tracks the shipping industry, estimated in 2015 that the Postal Service handled 40 percent of Amazon’s volume the previous year. He estimated at the time that Amazon pays the postal service $2 per package, which is about half what it would pay publicly-traded United Parcel Service Inc. and FedEx Corp.
While aides say the White House isn’t currently preparing punitive measures toward Amazon, the company remains exposed to government action on several fronts.
Amazon in Trump’s Crosshairs: Here’s What the President Could Do
The Justice Department or FTC could open antitrust or consumer protection investigations. The company is competing for a multibillion dollar contract to provide cloud computing services to the Pentagon. State attorneys general could open investigations, or states could seek to collect more sales taxes from third-party vendors who use Amazon.
In a pair of Twitter messages on Saturday, Trump said Amazon “must pay real costs (and taxes) now!” Amazon collects sales taxes in every state that levies them for its own sales, but not on behalf of third parties that sell through the site.
Any move made by Trump that is perceived as revenge against Amazon founder Jeff Bezos for his ownership of The Washington Post would invite comparisons to President Richard Nixon, who, at the height of the Watergate scandal, threatened the Post’s broadcast licenses.” Bloomberg
Business Community Comment: Reuters
“The business community has criticized Trump. “It’s inappropriate for government officials to use their position to attack an American company. The record is clear: deviating from those processes undermines economic growth and job creation,” said Neil Bradley, chief policy officer of the U.S. Chamber of Commerce, citing the value of the free enterprise system and the rule of law.” Reuters
^ S&P500 Index today (mouseover for 12 month view) [Chart: Google Finance]
|Index||Ticker||Today||Change||31 Dec 17||YTD|
|S&P 500||SPX (INX)||2,614.45||+1.26%||2,238.83||-2.22%|
^ USD and AUD denominated indices over the past 52 weeks Chart: Bunting
|Index||Currency||Today||Change||31 Dec 17||YTD|
Portfolio stock prices
|Stock||Ticker||Today||Change||31 Dec 17||YTD|
Selected Tech News Headlines
- Amazon shares swing as Trump threatens higher shipping rates: “Shares of Amazon.com Inc pared earlier gains on Tuesday after U.S. President Donald Trump repeated his unsubstantiated claim that deliveries for the world’s biggest online retailer cost the U.S. Postal Service money and threatened to raise rates. It was the latest salvo in a string of attacks in recent days as Trump stepped up his criticism of Amazon and its founder and Chief Executive Jeff Bezos, who privately owns The Washington Post.” Reuters
- Silicon Valley, Wall Street taking notes on Spotify debut: “Spotify Technology SA’s (SPOT) unusual route to becoming a public company is a test case for other multibillion-dollar tech companies that are looking to sell their shares but are not in need of cash. On Tuesday, investors (were) able to buy and sell shares in the Swedish music streaming service in the NYSE’s first-ever direct floor listing. This is without Spotify having hired investment banks as underwriters and undertaking an investor road show as is typical in a traditional initial public offering (IPO). Spotify (was able to) eschew a traditional IPO because it does not require fresh capital and is a popular consumer brand about which the investors do not need educating through a road show. “This is a big moment for the venture capital industry. It will enable billions to be returned back to investors, which will release more capital into Europe.” said Felix Capital managing partner Frederic Court, a European venture capitalist. Spotify’s direct listing also follows a mixed bag of recent IPOs by some of the so-called tech unicorns that had been worth at least $1 billion.” Reuters
^ Bloomberg Dollar Spot Index (DXY) movements today (mouseover for 12 month view) Chart: Bloomberg
“The Bloomberg Dollar Spot Index (DXY) rose 0.1% to the lowest in a week.
The EUR fell 0.3% to USD 1.2262, the weakest in two weeks.
Britain’s GBP rose 0.1% to USD 1.4053.
Japan’s JPY fell 0.7% to 106.63 per USD.
The yield on 10-year Treasuries gained 5 basis points to 2.78%, the highest in a week.
Germany’s 10-year yield was unchanged at 0.50%, the lowest in 12 weeks.” Bloomberg
^ AUD movements against the USD today (mouseover for 12 month view) Chart: xe.com
Oil and Gas Futures
Prices are as at 15:47 EDT
- NYMEX West Texas Intermediate (WTI): $63.55/barrel +0.86% Chart
- ICE (London) Brent North Sea Crude: $68.12/barrel +0.71% Chart
- NYMEX Natural gas futures: $2.70/MMBTU +0.52% Chart
Spotify Begins Trading on NYSE
“Spotify Technology SA (SPOT) shares surged following the largest-ever direct listing on Tuesday, giving the world’s leading streaming music service a market value of nearly $30 billion. Shares opened at $165.90, up nearly 26% from a reference price of $132 a share set by the on the New York Stock Exchange late on Monday, which gave an early estimate of the level at which supply and demand could be balanced.
Spotify’s unusual route to publicly trading its shares via a direct listing rather than a more usual initial public offering will likely be watched by other companies tempted to list without selling new shares, and by bankers that could lose out on millions of dollars in future underwriting fees.
Some 14 million shares had changed hands within an hour after trading began on Tuesday. Nearly 91% of Spotify’s 178 million shares were tradable, a much higher percentage than typical in a traditional IPO. Some market-watchers cautioned investors not to read too much into the first-day pop, given the mixed performance of recent tech IPOs.
Spotify’s debut came on the heels of a steep U.S. equity selloff led by tech stocks, although the market had found firmer footing at midday on Tuesday.
“It’s a fair market price. It’s not manipulated or set by any puts and takes by banks or institutional investors,” said Chi-Hua Chien, an early investor in Spotify who is now at San Mateo, California-based Goodwater Capital.
Since launching its streaming music service a decade ago, the Stockholm-founded company has overcome heavy resistance from big record labels and some major music artists to transform how the industry makes money. Spotify offers access to vast libraries of music rather than making users pay for CDs or downloads of individual albums or tracks.
The company has structured the listing to allow existing investors to sell directly to the public while offering no new shares of its own. Analysts had flagged concerns that forgoing hiring investment banks as underwriters or holding traditional promotional events with institutional investors could mean volatility in Spotify shares once formal trading kicked off. Spotify’s opening public price was determined by buy and sell orders collected by the NYSE from broker-dealers. Based on those orders, the price was set based on a designated market maker’s determination of where buy orders could be matched with sell orders.
While Chief Executive Daniel Ek skipped NYSE rituals such as opening bell-ringing and trading floor interviews to tout the stock, the front of the 115-year-old Greek Revival exchange building was draped in a vast green-and-black Spotify banner.” Reuters
AU: Commonwealth Bank Manufacturing PMI. Mar 2018
Press Release Extract [au_pmi]
Australia’s manufacturing sector continued to expand in March, albeit to the softest extent in six months. This slower pace of improvement reflected weaker growth rates for output, new orders and employment. Nonetheless, new business continued to expand sharply, exerting pressures on operating capacities and supply chains. Input prices rose markedly, amid raw material shortages, prompting firms to hike selling prices.
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 – declined to 54.3 in March, from 55.6 in February. This was the lowest reading recorded since September last year and below the average observed over the survey history. Nonetheless, the rate of improvement in the manufacturing sector was solid overall.
Output growth slowed for a third month in a row in March to the weakest since September 2017. That said, the pace of expansion was solid overall. The latest rise in production was supported by healthy inflows of new work, and hampered by shortages of raw materials. New business increased sharply amid strong demand from both new and existing customers. Sales to overseas clients also rose during March, a trend which has been apparent in each of the last seven months.
Ongoing growth in order book volumes led to a further accumulation in backlogs of work. Lacking input supply was accompanied by strong input demand, ultimately weighing on vendor performance. Average lead times deteriorated sharply during March, although to the least extent since last August. Suppliers raised prices sharply, with panellists reporting higher costs for oil, steel and utilities. However, an accommodative demand environment enabled firms to partly offset this and raise output prices. The rate of charge inflation accelerated in March to a ten-month high.
Australian manufacturers continued to hire additional staff in March, in an effort to raise capacity and keep up with demand pressures. That said, the rate of job creation eased to a six-month low.
Lastly, confidence remained elevated, with two-thirds of panellists anticipating output to rise over the coming 12 months. Forecasts of stronger demand and planned new product launches supported business optimism.
Commenting on the Commonwealth Bank Manufacturing PMI data, Michael Blythe, Chief Economist at the Commonwealth Bank, said: “The Australian manufacturing sector continued to expand during the first quarter of 2018. The pace of growth, however, was a notch below the solid outcomes at the end of 2017. Capacity pressures persist in the manufacturing sector. The backlog of work is still rising and supplier delivery times are still lengthening. Rapidly rising input prices – for oil, steel and utilities – are adding to potential inflation pressures. Manufacturers appear to be taking advantage of firm demand conditions to pass on these input price rises. Output prices expanded at the fastest pace since mid-2017.””
IHS Markit, “Commonwealth Bank Manufacturing PMI. Mar 2018“, 3 Apr 2018 More
AU: Internet Activity. Dec 2017
Press Release Extract [au_internet]
“Type of Access Connection
There were 14.2 million internet subscribers in Australia at the end of December 2017. This is an increase of 3.4% from the end of June 2017.
Fibre connections grew by 38.7% in the six months between June 2017 and December 2017. The number of fibre connections has more than doubled between December 2016 and December 2017, reaching nearly three million subscribers.
Volume of Data Downloaded
The total volume of data downloaded in the three months ended 31 December 2017 was 3.6 million Terabytes (or 3.6 Exabytes).
This is a 19.7% increase in data downloads when compared with the three months ended 30 June 2017 and a 38.6% increase in the year between December 2016 and December 2017.
Data downloaded via fixed line broadband (3.5 million Terabytes) accounted for 97.0% of all internet downloads in the three months ended 31 December 2017.
Volume of Data Downloaded Dec 2016 Jun 2017 Dec 2018 Broadband: Fixed Line 2,532,367 TB 2,913,245 TB 3,478,568 TB Broadband: Wireless 54,689 TB 82,727 TB 107,960 TB Broadband: Total 2,587,056 TB 2,995,972 TB 3,586,528 TB
The growth in the number of subscribers has remained stable while the growth in the volume of data downloaded has been increasing.
Mobile Handset Subscribers
As at 31 December 2017, there were approximately 26.7 million mobile handset subscribers in Australia. This is an increase of 1.4% since June 2017.
The volume of data downloaded via mobile handsets for the three months ended 31 December 2017 was 203,157 Terabytes. This was a 16.0% increase in data downloads via mobile handsets when compared with the three months ended 30 June 2017 and a 39.1% increase in downloads in the year ended 31 December 2017.”
Note: The report contains details of internet activity supplied by Internet Service Providers (ISPs) in Australia with more than 1,000 subscribers. It includes information on internet subscribers by type of connection, the volume of data downloaded and the advertised download speed of the internet connection.
Australian Bureau of Statistics, “8153.0 Internet Activity. Dec 2017“, 3 Apr 2018 More
AU: RBA Monetary Policy Decision
Press Release Extract [au_rba]
[Same text as last month]
At its meeting today, the Board decided to leave the cash rate unchanged at 1.50 per cent.
The global economy has strengthened over the past year. A number of advanced economies are growing at an above-trend rate and unemployment rates are low. The Chinese economy continues to grow solidly, with the authorities paying increased attention to the risks in the financial sector and the sustainability of growth. Globally, inflation remains low, although it has increased in some economies and further increases are expected given the tight labour markets. As conditions have improved in the global economy, a number of central banks have withdrawn some monetary stimulus and further steps in this direction are expected.
Long-term bond yields have risen over the past six months, but are still low. Equity market volatility has increased from the very low levels of last year, partly because of concerns about the direction of international trade policy in the United States. Credit spreads have also widened a little, but remain low. Financial conditions generally remain expansionary . There has, however, been some tightening of conditions in US dollar short-term money markets, with US dollar short-term interest rates increasing for reasons other than the increase in the federal funds rate. This has flowed through to higher short-term interest rates in a few other countries, including Australia.
The prices of a number of Australia’s commodity exports have fallen recently, but remain within the ranges seen over the past year or so. Australia’s terms of trade are expected to decline over the next few years, but remain at a relatively high level.
The Australian economy grew by 2.4 per cent over 2017. The Bank’s central forecast remains for faster growth in 2018. Business conditions are positive and non-mining business investment is increasing. Higher levels of public infrastructure investment are also supporting the economy. Stronger growth in exports is expected after temporary weakness at the end of 2017. One continuing source of uncertainty is the outlook for household consumption, although consumption growth picked up in late 2017. Household income has been growing slowly and debt levels are high.
Employment has grown strongly over the past year, with employment rising in all states. The strong growth in employment has been accompanied by a significant rise in labour force participation, particularly by women and older Australians. The unemployment rate has declined over the past year, but has been steady at around 5½ per cent over the past six months. The various forward-looking indicators continue to point to solid growth in employment in the period ahead, with a further gradual reduction in the unemployment rate expected. Notwithstanding the improving labour market, wages growth remains low. This is likely to continue for a while yet, although the stronger economy should see some lift in wages growth over time. Consistent with this, the rate of wages growth appears to have troughed and there are reports that some employers are finding it more difficult to hire workers with the necessary skills.
Inflation remains low, with both CPI and underlying inflation running a little below 2 per cent. Inflation is likely to remain low for some time, reflecting low growth in labour costs and strong competition in retailing. A gradual pick-up in inflation is, however, expected as the economy strengthens. The central forecast is for CPI inflation to be a bit above 2 per cent in 2018.
On a trade-weighted basis, the Australian dollar remains within the range that it has been in over the past two years. An appreciating exchange rate would be expected to result in a slower pick-up in economic activity and inflation than currently forecast.
The housing markets in Sydney and Melbourne have slowed. Nationwide measures of housing prices are little changed over the past six months, with prices having recorded falls in some areas. In the eastern capital cities, a considerable additional supply of apartments is scheduled to come on stream over the next couple of years. APRA’s supervisory measures and tighter credit standards have been helpful in containing the build-up of risk in household balance sheets, although the level of household debt remains high.
The low level of interest rates is continuing to support the Australian economy. Further progress in reducing unemployment and having inflation return to target is expected, although this progress is likely to be gradual. Taking account of the available information, the Board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time.”
Reserve Bank of Australia, “Monetary Policy Decision“, 3 Apr 2018 (14:30 AET) More
EU: Eurozone Manufacturing PMI. Mar 2018
Press Release Extract [eu_pmi]
- Final Eurozone Manufacturing PMI at 56.6 in March (Flash: 56.6, February Final: 58.6)
- Broad growth slowdown seen across all nations and manufacturing sub-sectors
- Increased signs of supply chain constraints reining in output growth and raising input prices
Eurozone manufacturing operating conditions improved to the least marked extent in eight months during March, as the sector continued its post turn of the year slowdown. Rates of expansion eased across all of the nations covered by the latest PMI surveys and across the consumer, intermediate and investment goods industries.
The final IHS Markit Eurozone Manufacturing PMI® posted 56.6 in March, unchanged from the earlier flash estimate and down further from December’s series-record high. The latest reading and the average over the first quarter as a whole (58.2) both remained indicative of solid growth nonetheless.
The Netherlands, Germany and Austria were the strongest performers overall. All of the other nations covered by the survey also saw solid rates of growth in March. The weakest increases were signalled in France and Ireland.
The further easing in the headline PMI mainly reflected slower growth of manufacturing production and incoming new business, both of which rose to the lowest extents since November 2016. Growth in new export business* (which is not a component of the headline PMI) slipped to a 15-month low.
The breadth of the upturns in output, new orders and new export business was as wide as their slowdowns during March, as all of the countries covered recorded sustained growth in each, albeit at slower rates than in recent months. In some Northern nations, this was partly driven by bad weather.
There were also signs that capacity constraints deriving from the recent growth spurt were impacting on production growth in March. Recent lengthening in suppliers’ delivery times has been among the greatest in the survey history, leading to widespread reports of raw material shortages and supply delays. This trend was especially noticeable in the Netherlands and Germany, both of which saw record lengthening in vendor lead times.
Backlogs of work at euro area manufacturers also increased during March, taking the current sequence of expansion to almost three years. Companies reacted to the sustained pressure on their capacity by raising employment. Jobs growth was signalled for the forty-third straight month, although the pace of increase eased to a seven-month low.
Job creation was recorded in all of the nations covered by the survey in March, with the steepest rises seen in the Netherlands, Austria and Germany. However, in line with the trend in production, rates of expansion eased across all countries.
Input price inflation remained marked in March, despite easing to a six-month low. Higher costs were driven, at least in part, by supply-chain constraints. Average selling prices also continued to rise at a solid clip, albeit the slowest in the year so far, as companies passed on the rise in purchasing costs. There were also reports that the ongoing upturn in demand was leading to improved pricing power.
Sentiment among euro area manufacturers regarding future output softened in March to a 15- month low, but remained strongly positive overall. Only Greece signalled an improvement in optimism during the latest survey month.
Commenting on the final Manufacturing PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:
“March saw the biggest fall in the manufacturing PMI since June 2011 and the third successive slowing in the pace of expansion.
“We should not be too worried by the fall in the PMI as some moderation in the pace of growth from the surge seen at the turn of the year was inevitable, not least because short-term capacity constraints limit the economy’s ability to grow so quickly for long periods. This has been clearly evident in the recent lengthening of supply delivery times. Some of the slowdown has also been attributable to temporary factors such as bad weather.
“However, the fact that business optimism about the coming year has slipped to a 15-month low suggests there are other factors that are now hitting factory order books. Export growth has more than halved since late last year, linked in part to the appreciation of the euro, and in some cases demand is being stymied by higher prices.
“The overall pace of growth nevertheless remains robust by historical standards, with decent PMI readings seen in all countries, including Greece, to indicate a steady, broad-based expansion. Manufacturing should therefore make another substantial contribution to GDP growth in the first quarter, and the presence of sustained inflationary pressures will be welcomed by policymakers.””
IHS Markit, “Eurozone Manufacturing PMI. Mar 2018“, 3 Apr 2018 More
Global Manufacturing PMI. Mar 2018
Press Release Extract [global_pmi]
Global Manufacturing PMI™ Summary: Mar 2018
- Global PMI 54.1 (Feb 2018: 53.4)
- Output 54.8 (Feb 2018: 53.5)
- New Orders 55.0 (Feb 2018: 53.9)
- New Exports 53.1 (Feb 2018: 51.8)
- Employment 53.1 (Feb 2018: 52.3)
- Input Prices 60.7 (Feb 2018: 60.0)
- Output Prices 54.0 (Feb 2018: 53.8)
- Future Output 64.8 (Feb 2018: 65.0)
The rate of expansion in the global manufacturing sector eased to a five-month low in March, as companies reported slower growth of output, new orders and employment.
The J.P.Morgan Global Manufacturing PMI™ – a composite index produced by J.P.Morgan and IHS Markit in association with ISM and IFPSM – posted 53.4 in March, down from 54.1 in February and its lowest reading since October 2017. The average level over the opening quarter as a whole (54.0) was nonetheless unchanged from the prior quarter.
PMI data for Colombia manufacturing are included in the global readings for the first time. This has resulted in minor revisions to previously published numbers.
March data signalled slower rates of expansion in both the consumer and intermediate goods sectors, with growth at three- and seven-month lows respectively. The Investment Goods PMI rose to its highest level in the year-so-far.
National PMI data signalled expansions in almost all of the nations covered, with only South Korea, Malaysia and Thailand seeing contractions. Growth slowed in the euro area, China, Japan, India and Australia, but improved in the US, the UK, Brazil and Russia.
Global manufacturing production increased at the slowest pace in eight months during March, as growth of total new orders and new export business both eased further. The increase in new export orders was the weakest in 15 months. Inflows of new work were still sufficient to test capacity, however, leading to a rise in work-in-hand for the twenty-second straight month.
Employment increased again in March, albeit to the least marked extent in six months. Job creation was signalled in all of the nations covered except China, India, Russia, Thailand and the Philippines. That said, only a few countries (Poland, Mexico, Greece, Colombia and Myanmar) saw faster jobs growth than during February.
Price pressures eased in March, with rates of increase in output charges and input costs both moderating. Part of the rise in purchase prices reflected ongoing supply-chain disruption, including shortages of certain inputs. This was reflected in the trend in vendor lead times, which lengthened for the twenty-fifth successive month and to the greatest extent in almost seven years.”
J.P.Morgan and IHS Markit in association with ISM and IFPSM, “Global Manufacturing PMI. Mar 2018 – Global Manufacturing PMI at five-month low in March“, 3 Apr 2018 (11:00) More
^ JPY movements against the USD over the past month (mouseover for inverse) Chart: xe.com
Stockmarket: Nikkei 225
^ Nikkei 225 movements this week [Chart: Google Finance]
NBS PMI. Mar 2016
“1. Manufacturing purchasing managers index
In March 2018, China’s manufacturing purchasing managers index (PMI) was 51.5 percent, an increase of 1.2 percentage points from last month. The manufacturing industry showed a development trend of steady rise.
In view of the sizes of enterprises, the PMI of large-sized enterprises was 52.4 percent, increased 0.2 percentage points from last month, and continued to stay in the expansion range; that of medium-sized and small-sized enterprises were 50.4 and 50.1 percent, increased 1.4 and 5.3 percentage points from last month respectively, higher than the threshold.
Among the five sub-indices composing PMI, the production index, new orders index and supplier delivery time index were higher than the threshold. The main raw materials inventory index and employed person index and were lower than the threshold.
Production index was 53.1 percent, an increase of 2.4 percentage points month-on-month, and was in the expansion range, indicating that the growth of manufacturing production has accelerated, with the intensive start of business after the Spring Festival.
New orders index was 53.3 percent, an increase of 2.3 percentage points month-on-month, higher than the threshold, showing that the the expansion of manufacturing market demand has accelerated.
Main raw materials inventory index was 49.6 percent, increased 0.3 percentage points from last month, kept rising for three consecutive months, and was lower than the threshold, indicating that the pace of decline of manufacturing industry’s main raw material inventory continued to be narrowed.
Employed person index was 49.1 percent, increased 1.0 percentage point from last month, lower than the threshold, indicating that the pace of decline of manufacturing enterprises’ labor employment has narrowed.
Supplier delivery time index was 50.1 percent, increased 1.7 percentage points from last month, and was above the threshold, indicating that the delivery time of manufacturing raw material suppliers has speeded up.
2. Non-manufacturing purchasing managers index
In March 2018, China’s non-manufacturing purchasing managers index was 54.6 percent, an increase of 0.2 percentage points from the previous month. The non-manufacturing industry still maintained steady and rapid operation as a whole.
In view of different industries, non-manufacturing purchasing managers index of service industry was 53.6 percent, a decrease of 0.2 percentage points from the previous month, but higher than last year’s average, and the service industry maintained steady expansion. Of which, the indices of transport via railway, air transport, post and express delivery, telecommunications, broadcasting, television and satellite transmission services, Internet, software and information technology services, monetary financial services, capital market services, insurance, were positioned in the high level of the range which above 55.0 percent, and have shown strong expanding momentum. The indices of transport via road, restaurants, real estate, were lower than the threshold, and the total business decreased. Non-manufacturing purchasing manager index of construction industry achieved 60.7 percent, an increase of 3.2 percentage points from the previous month. The production and operation activities of construction industry has accelerated significantly.
New orders index was 50.1 percent, down by 0.4 percentage points from the previous month, while continued to stay above the threshold, indicating that the growth rate of market demand of non-manufacturing industry declined. In view of different industries, the new orders index of service industry was 49.8 percent, decreased 0.9 percentage points from the previous month, lower than the threshold. The new orders index of construction industry was 52.0 percent, increased 2.5 percentage points from the previous month, and rose above the threshold.
Input price index was 49.9 percent, down by 3.3 percentage points from the previous month, and lower than the threshold, indicating that the input price during the process of non-manufacturing enterprises’ operating activities declined slightly. In view of different industries, the intermediate input price indices of service industry was 50.3 percent, decreased 2.1 percentage points from the previous month. The input price index of construction industry was 48.0 percent, a decrease of 9.9 percentage points from the previous month.
The sales price index was 49.3 percent, down by 0.6 percentage points from the previous month, lower than the threshold, indicating that the overall level of non-manufacturing sales prices decreased. In view of different industries, the sales price index of service industry was 48.9 percent, a decrease of 0.7 percentage points from the previous month.The sales price index of construction industry was 51.9 percent, an increase of 0.2 percentage points from the previous month.
Employment index was 49.2 percent, a decrease of 0.4 percentage points from the previous month, and continued to be lower than the threshold. In view of different industries, the employment index of service industry was 48.6 percent, a decrease of 0.3 percentage points from the previous month. The employment index of construction industry was 52.6 percent, a decrease of 0.9 percentage points from the previous month.
Business activities expectation index was 61.1 percent, a decrease of 0.1 percentage point from last month, and kept staying in the high level of the range which above 60.0 percent for eleven consecutive months. In view of different industries, the business activities expectation index of service industry was 60.1 percent, a decrease of 0.3 percentage points from the previous month. That of construction industry was 66.7 percent, an increase of 1.0 percentage point from the previous month.
3. Composite PMI Output Index
In March 2018, China’s Composite PMI Output Index was 54.0 percent, an increase of 1.1 percentage points from last month, and continued to be higher than the threshold, indicating that the overall production and operation activities of Chinese enterprises presented a development trend of accelerating expansion.“
National Bureau of Statistics of China, “Purchasing Managers Index for March 2018“, 3 Apr 2018 More
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