Confidence in Britain’s Manufacturing Sector Dips in November
Today seems to be another busy day for global economy watchers. Starting with the UK, the just released data showed that the nation’s Markit manufacturing Purchasing Managers’ Index (PMI) declined in November.
Meanwhile in the Eurozone, final manufacturing PMI recorded its highest reading since January 2014, while the German final manufacturing growth came in slightly below the flash reading for November. Going ahead, investors await the Euro region’s unemployment rate data for October along with the Italian third quarter gross domestic product (GDP) data. Later, the focus turns towards US data. Key releases on schedule are the ISM manufacturing index and weekly jobless claims. Separately, at yesterday’s Vienna meet, the OPEC nations agreed to trim production for the first time in 8 years.
Pound Sterling – UK Markets
The Pound has extended its previous session gains against the US Dollar and seems to be heading further north of the crucial 1.2500 handle. The just out data showed that UK’s Markit manufacturing PMI unexpectedly fell in November. Separately, a report by the mortgage lender, Nationwide Building Society, showed that British house prices edged up in November, after staying flat in October. However, annual house price growth recorded its weakest rate since January this year.
Yesterday, Sterling emerged as an outlier in the forex market, displaying a high degree of resilience against the greenback, despite the broader scenario favouring the US Dollar. The Pound seemed to be unfazed by the downbeat assessment of Britain’s financial stability rendered by the Bank of England. In its report, the central bank indicated that the outlook for financial stability in the UK remains challenging in the wake of the shock Brexit vote. Sentiment on the data front was hardly impressive either. The UK’s GfK consumer confidence index further dipped in November to record its worst figure since July.
US Dollar – US Markets
The greenback gained ground against most of its major peers yesterday. The latest economic report from the Federal Reserve’s (Fed) Beige Book indicated that the US economy reported moderate or modest growth from early October through mid-November. Further, personal income increased at its quickest pace in six months in October, while spending slowed more than expected in the same month. Moreover, the Fed’s preferred inflation indicator, the core personal consumption expenditure index, rose as expected on an annual and monthly basis in October. Additionally, private employers in the US added more jobs than anticipated in November. Amid an upbeat ADP employment report, investors will be eagerly waiting for the US Labour Department's non-farm payrolls report, scheduled tomorrow. A solid print on the payrolls report will cement expectations for an interest rate increase at Fed’s December meeting.
Today, the ISM manufacturing PMI will be on investors’ radar and is likely to expand in November, in line with recent upbeat economic releases in the nation.
Euro – European Markets
The Euro is trading higher against its major counterparts this morning, after the Eurozone’s Markit final manufacturing PMI registered its highest reading since January 2014 in November. That stood in line with an earlier flash estimate and came ahead of the October read. The region’s manufacturers seemed to benefit from a weaker domestic currency. Meanwhile in Germany, final manufacturing growth came in slightly below the flash reading in November, as new order intakes rose at a slower pace compared to that of the previous two months. Nevertheless, it sat comfortably above the 50-mark threshold that separates expansion from contraction. Further, French and Italian manufacturing PMIs surpassed investor expectations for November. Moreover, Spanish factory output advanced in November at its fastest pace since January, amid growth in several key variables such as output, new orders and employment.
Yesterday, the Eurozone’s annual inflation rose to a 31-month high in November. However, most of this acceleration was simply the statistical effect of past oil price drops being knocked out of the base figures.
Other Currencies – Highlights
The Swiss Franc has managed to reverse its previous session losses and is trading higher against the greenback this morning, following a couple of optimistic data releases earlier in the session. To begin with, Switzerland’s real retail sales surprisingly improved on an annual basis in October. Additionally, the nation’s SVME - PMI unexpectedly rose in November. Going ahead, Switzerland’s third quarter GDP data is up for release tomorrow and is expected to register a smaller growth in comparison to the previous quarter’s reading. A peek into next week’s Swiss economic calendar shows that the nation’s consumer price index and unemployment rate data for November are scheduled for release.
During the previous session, data from the investment bank UBS showed that Switzerland’s consumption indicator slightly advanced for October from a downwardly revised figure in September. The increase was mainly backed by robust domestic tourism. On the other hand, survey results from the KOF Swiss Economic Institute showed that its economic barometer declined in November, due to impaired sentiment in hotel, catering industry and manufacturing sector.