On Monday, China’s economy Caixin PMI (Purchasing Manager’s Index) for the manufacturing sector came out at 48.5 versus an expected value of 48.9 and previous 48.6. Economic conditions for China’s producers continued to deteriorate during December. Production is on a downslope for the 8th month in a row, with a massive fall in the new work sector. The analysis shows a weak demand both internally and externally, December’s new export businesses indicator falling for the first time in three months. As a direct result, manufacturing companies are cutting losses starting with their staff and continuing with their purchasing activity, in line with the low market requirements. On the other hand, the deflation risk still lingers around, highlighted by declines in selling prices, but also in input costs.
[Tweet “China’s economy Caixin PMI for the manufacturing sector came out at 48.5 versus an expected 48.9 “]
In the UK, the manufacturing PMI posted 51.9 for the month of December, previous reading in November being of 52.7. The new order growth pace slowed at its lowest pace in the last 5 months (at 52.8), while the new business index pulled back the furthest since July. Exports are in further in decline. As factory prices went down the 4th month in a row and weak data is brought forward in the finance and business services sectors, ONS (Office for National Statistics) revises the GDP growth for the third quarter of last year down to 0.4%.
November registers a decline in construction spending with 0.4%, missing consensus at +0.5%. The construction sector picks up the pace in December (supported by commercial buildings), the PMI in constructions reaching 57.8, above the expected 56.0 and after November’s seven-month low of 55.3, increasing at the fastest pace since 2014’s October. From 2008 to 2015, UK’s construction PMI averages 51.84 with an all-time high of 64.60 in January 2014 and the lowest ever registered in February 2009 at 27.80.
The EUR/USD major is still under pressure, despite the below-expectation release of ISM’s (Institute for Supply Management) manufacturing index in the US. The ISM index fell to 48.2 in the month of December, hitting its lowest point since June 2009 and coming under the forecasted 49.0.
On Tuesday, oil prices reversed their early gain to close the session on negative, due to the ever-present concern over the global supply glut, China’s economy and the Middle East tensions. WTI’s (West Texas Intermediate) February future fell 1.4% reaching $36.25 per barrel. Yesterday, the intraday high was set just above $37.00 per barrel.
