UK PMI manufacturing finalized at 55.6, 35-month high

    UK PMI Manufacturing was finalized at 55.6 in November, up from October’s 53.7. It’s also a 35-month high, and an expansion reading for six successive months. Markit noted that “Brexit buying” leads to higher purchasing, stocks and exports.

    Rob Dobson, Director at IHS Markit: “Growth of the UK manufacturing sector picked up in November, temporarily boosted by ‘Brexit-buying’ among clients and the ongoing boost from economies re-opening following lockdowns earlier in the year…. Whether the upturn of manufacturing production can be sustained into the new year is therefore highly uncertain, especially once the temporary boosts from Brexit purchasing and stockbuilding wane.

    “On this front some reassurance is provided by the survey’s gauge of business optimism. Confidence has risen to a level not seen since late-2014, with over three fifths of manufacturers (61%) still expecting to raise output over the coming year. On the other hand, many manufacturers remain very concerned about the outlook and generally reluctant to expand capacity, hence employment fell for the tenth month in a row.”

    Full release here.

    Eurozone PMI manufacturing finalized at 54.8, a brighter outlook indicated by upturn in optimism for year ahead

      Eurozone PMI Manufacturing was finalized at 53.8 in November, down from October’s 54.8. Markit said there were slower, but still marked gains in output and new orders. Job losses continued but confidence improved further. Looking at some member states, Germany PMI Manufacturing stood high at 57.8. The Netherlands hit 22-month high at 54.4. However, Italy hit 5-monthlow at 51.5. Spain hit 5-month low at 49.8. France hit 6-month low at 49.6. Greece hit 6-month low at 42.3.

      Chris Williamson, Chief Business Economist at IHS Markit said: “Eurozone manufacturing output continued to grow at a decent pace in November… The survey therefore adds to evidence that the region will avoid in the final quarter of the year a similar scale of downturn recorded in the second quarter… Encouragingly, a brighter outlook is indicated by the upturn in optimism for the year ahead, suggesting that the upturn should gather strength again in the coming months as lockdown measures ease and spending, especially investment, picks up in response to the recent news on vaccine development.”

      Full release here.

      Swiss GDP grew 7.2% qoq in Q3, still -2% below pre-crisis level

        Swiss GDP grew 7.2% qoq in Q3, above expectation of 5.8% qoq. Still, output was -2% below pre-crisis level, after contracting by a total of -8.6% in the first half of the year.

        Looking at some details, private consumption bounded significantly by 11.9% following gradual easing of coronavirus restrictions. Investment in equipment rose 8.8% and investment in construction rose 5.1%. Final domestic demand posted 8.9% growth.

        Full release here.

        Also from Swiss, SVME PMI rose to 55.2 in NOvember, up from 52.3, well above expectatio nof 51.5.

        RBA stands pat, prepared to more if necessary

          RBA left monetary policy unchanged as widely expected. Cash rate target and 3-year AGS yield target are kept at 0.10%. The parameters and term funding facility and government bond purchases were maintained too. It continued to expect no increase in cash rate for “at least 3 years”. Bond purchase size will continue to be under review. The Board is “prepared to do more if necessary”.

          Regarding the economy, RBA said “recent data have generally been better than expected… but the recovery is still expected to be uneven and drawn out and it remains dependent on significant policy support”. GDP would not reach pre-pandemic level until the end of 2021. While employment growth was strong in October, further rise in unemployment is still expected. Inflation is expected to remain subdued till 2022.

          Full statement here.

           

          Australia AiG manufacturing dropped to 52.1, but recovery prosect continues

            Australia AiG Performance of Manufacturing Index dropped -4.2 pts to 52.1 in November, indicating expanding conditions at a slower rate. Looking at some details, all seven activity indices declined. Production dropped -2.6 to 52.5. Employment dropped -2.5 to 52.8. New orders dropped -5.1 to 53.3. Exports dropped -2.7 to 50.0. Four of the six manufacturing sectors expanded, including machinery & equipment, metal products, petroleum, textiles & clothing.

            Ai Group Chief Executive Innes Willox said: “The manufacturing sector was broadly stable in November after a return to positive territory in October… Encouragingly, both new orders and employment continued to grow in November, pointing to the prospect of a continuing recovery as we head towards the end of the year”.

            Full release here.

            Also released, building permits rose 3.8% mom in October, above expectatio nof -3.0% mom decline. current accoutn surplus narrowed to AUD 10.0B in Q3, larger than expectation of AUD 7.1B.

            Japan PMI manufacturing finalized at 49.0, optimistic on future output

              Japan PMI Manufacturing was finalized at 49.0 November, up from October’s 48.7. While still concretionary, it’s already the highest reading since August 2019. Markit also noted softer falls in both output and news orders. Businesses also remained optimistic regarding future output.

              Usamah Bhatti, Economist at IHS Markit, said: “Concern remains that weaknesses caused by the COVID-19 pandemic persisted as both output and new orders both fell for the twenty-third month in a row. Furthermore, infection rates have surged in both domestic and international markets which resulted in a renewed fall in export orders, which dampened confidence further.

              “However, Japanese manufacturers continue to report a positive outlook beyond the immediate concerns surrounding the sector. Around 33% of survey respondents foresee a rise in output over the coming year amid hopes that the pandemic dissipates and a robust economic recovery. Currently, IHS Markit expects industrial production to grow 7.3% in 2021 although this is from a lower base and does not fully recover the output lost to the pandemic.”

              Full release here.

              Also from Japan, unemployment rate rose to 3.1% in October versus expectation of 3.0%. Capital spending dropped -10.6% in Q3 versus expectation of -12.0%.

              China Caixin PMI manufacturing rose to 54.9, highest in a decade

                China Caixin PMI Manufacturing rose to 54.9 in November, up from 53.6, above expectation of 53.6. That’s also the strongest reading since November 2010. The sector improved for the seven straight months, indicating a sustained and strong recovery. Markit also noted that both output and new orders increased at the fastest rates for 10 years. Employment expanded at quickest pace since May 2011.

                Wang Zhe, Senior Economist at Caixin Insight Group said: “We expect the economic recovery in the post-epidemic era to continue for several months. At the same time, deciding how to gradually withdraw the easing policies launched during the epidemic will require careful planning as uncertainties still exist inside and outside China.”

                Full release here.

                 

                IMF: Further support likely need from ECB

                  IMF warned that the second wave of coronavirus “poses a considerable risk to the recovery” of EU’s economy, “through early 2021″. But, ” the recent promising news on vaccine development provide significant upside risk further out , as rapid and widespread delivery of safe and effective vaccines would likely spur a fast recovery”.

                  It added that “further support is likely to be needed” from ECB, with economic outlook “deteriorating further”. “Expanding asset purchases will be the first line of defense, but other options—including further relaxation of Targeted Longer-Term Refinancing Operations’ terms and a deposit rate cut—should also be considered.”

                  IMF’s “Euro Area: Staff Concluding Statement of the 2020 Article IV Mission”

                  BoE Tenreyo: Boosts from vaccines only come when they’re rolled out widely

                    BoE MPC member Silvana Tenreyo welcome the news regarding coronavirus vaccine development. however, the economic boosts would not come until vaccines are actually rolled out widely. Households could still delay spending until the vaccines due to health risks.

                    Also she noted that the progress on job markets remain one of the bigger downside risks to BoE’s medium term economic outlook. Her vote for more QE at last meeting was for guarding against market dysfunctioning.

                    CAD/JPY ready for rebound resumption after mixed data

                      A batch of mixed economic data is released from from Canada today, IPPI dropped -0.4% mom in October versus expectation of 0.0% mom. RMPI rose 0.5% mom versus expectation of -2.0% mom. Building permits dropped -14.6% mom versus expectation of-3.8% mom. Current account deficit narrowed slightly to CAD -7.5B in Q3, smaller than expectation of CAD -8.6B.

                      Canadian Dollar is currently one of the strongest for today. CAD/JPY after drawing support from 4 hour 55 EMA. Break of 0.80.42 will resume the rebound from 79.22 to 81.42 resistance. Still, it’s uncertain if CAD/JPY is ready to breakout from range pattern started at 81.91. We’ll see.

                      ECB President Lagarde speaks at EPC Thought Leadership Forum

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                        Swiss KOF dropped to 103.5, retail sales rose 3.1% yoy

                          Swiss KOF Economic Barometer dropped to 103.5 in November, down from 106.6, above expectation of 101.0. The barometer is thus moving towards its long-​term average, which means that the outlook for the Swiss economy remains subdued also in view of the current pandemic situation.

                          Also from Swiss, retail sales rose 3.1% yoy in October.

                          Gold selloff resumes, strong support expected around 1725

                            Gold’s selloff resumes today by breaking through 1800 handle and hits as low as 1764.31 so far. Further decline is now expected as long as 1818.26 resistance holds. Current decline from 2075.18 is seen as correcting whole up trend from 1160.17. Deeper fall should be seen to 55 week EMA (now at 1749.77) and possibly slightly below.

                            But we’d expect strong support from 38.2% retracement of 1160.17 to 2075.18 at 1725.64 to contain downside and bring rebound. However, Sustained break of 1749.77 could bring even deeper correction to 61.8% retracement at 1509.70.

                            New Zealand ANZ business confidence jumped to -6.9 in Nov, surge in manufacturing

                              New Zealand ANZ Business Confidence jumped to -6.9 in November, well above preliminary reading of -15.6 and October’s final of -15.7. Manufacturing confidence surged 14.5 pts and turned positive to 6.7. Retail confidence and services confidence also rose 17.9 pts and 10.2 pts to -3.8 and -6.6 respectively. Agriculture and construction dropped by -2.4 and -15.8 to -52.4 and -3.3.

                              Activity Outlook rose to 9.1, versus preliminary reading of 4.6 and October’s 4.7. Manufacturing outlook rose 13.4 to 15.0. Construction rose 14.5 to 23.3. Services rose 3.2 to 9.2. But retail dropped -2.2 to 0 while agriculture dropped -5.1 to -9.1.

                              ANZ noted: “Monetary and fiscal policy have undoubtedly done their jobs this year. But it’s worth remembering that both work by bringing forward spending from the future. There’s no free lunch, and they need to be used judiciously. The true underlying momentum of the economy should become clearer over the next few months as the impact of one-offs fade, but the case for further life-support measures is becoming less clear by the day. And that’s certainly something to celebrate.”

                              Full release here.

                              China PMI manufacturing rose to 52.1 in Nov, highest in three years

                                The official China PMI Manufacturing rose to 52.1 in November, up from 51.4, above expectation of 51.5. That’s the highest reading in more than three years. It’s also the ninth straight month of growth reading. PMI Services rose to 56.4, up from 56.2, above expectation of 56.0.

                                According the Zhao Qinghe, the bureau’s senior statistician. Four factors grove manufacturing activity. Both supply and demand of Chinese manufactured goods continued to improve. Imports and exports steadily recovered. Prices of both raw materials and output rose. Prospect of manufacturers of all sizes also improved.

                                Japan industrial production rose 3.8% mom in Oct, 5th straight month of growth

                                  Japan industrial production rose 3.8% mom in October, well above expectation of 2.3% mom, and not much slower than September’s 3.9% mom. It’s also the fifth straight month of increase. The Ministry of Economy, Trade and Industry also said manufacturers expected growth to continue with another 2.7% mom in November, but a decline of -2.4% mom in December.

                                  Retail sales rose 6.4% yoy in October, matched expectations. That’s the first annual rise in eight months., following a -8.7% yoy decline in September.

                                  EU Barnier: Same significant divergences persist with UK

                                    EU chief Brexit negotiation Michel Barnier confirmed that he’s travelling to London this evening to continue in-person trade talks with the UK over the weekend. but he also noted, “same significant divergences persist”. An unnamed EU official said Barnier told national diplomats that “the gaps on level playing-field, governance and fisheries remain large,”

                                    On the UK side, Prime Minister Boris Johnson said, “Clearly there are substantial and important differences still to be bridged but we’re getting on with it.” He added, “the likelihood of a deal is very much determined by our friends and partners in the EU — there’s a deal there to be done if they want to do it.”

                                    ECB Villeroy: Recalibration must focus on quality of monetary policy transmission

                                      ECB Governing Council member Francois Villeroy de Galhau said, in face of “prolonged uncertainty” due to resurgence in coronavirus infections, “our first objective must be keeping very favorable financing conditions as long as necessary”.

                                      But he also added, “recalibration of instruments must focus in particular not only on the level of monetary support, but also on the duration, flexibility and efficient targeting, in short, the quality of monetary policy transmission.”

                                      Eurozone economic sentiment dropped to 87.6

                                        Eurozone Economic Sentiment Indicate dropped markedly to 87.6 in November, down from 91.1, but beat expectation of 86.5. Employment Expectations Indicator posted the second fall in a row, down -3.3 pts to 86.6. Amongst the largest euro-area economies, the ESI plunged in Italy (-8.7) and France (-4.8), while its losses were more contained in Germany (-2.8) and Spain (-2.0). The Netherlands bucked the trend with a moderate improvement in sentiment (+1.0).

                                        Looking at some details, industry confidence dropped from -9.2 to -10.1. Services confidence dropped from -12.1 to -17.3. Consumer confidence dropped from -15.5 to -17.6. Retail trade confidence dropped from -6.9 to -12.7. Construction confidence dropped from -8.3 to 9.3.

                                        Full release here.

                                        France GDP grew 18.7% in Q3, consumer spending rose 3.7% mom in Oct

                                          According to the second estimate, France GDP grew 18.7% in Q3, after the -13.8% decline back in Q2. Despite the strong bounce, GDP remained well below the level it had before the pandemic. In volume terms, GDP was down -3.9% yoy.

                                          In October, consumer spending rose 3.7% mom, much better than expectation of -1.0% mom decline. It’s 2.7% yoy higher than the level a year ago. This increase was driven by a sharp rise in food consumption (+7.1%) and energy expenditure (+6.4%). Manufactured good purchases were almost stable (-0.1%). In November CPI rose 0.2% yoy, up from 0.0% yoy in October.