Edge and Odds

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Edge and Odds

Invest with smart knowledge and objective odds

EUROZONE PMI, NEW ORDERS ACCELERATE

Growth of eurozone manufacturing production accelerated to a ten-month high in March, underpinned by the fastest expansion of incoming new business since April of last year. With the performance of the sector strengthening further, companies raised employment at the quickest pace for over three-and-a-half years.

At 52.2 in March, up from 51.0 in February, the final seasonally adjusted Eurozone Manufacturing PMI® was above its earlier flash estimate of 51.9. The PMI currently stands at its highest level for ten months and has remained in expansion territory since July 2013. (…)

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March saw the sharpest increase in new export orders since April 2014, with growth registered in Germany, Italy, Spain, the Netherlands and Ireland. Companies reported that the weaker euro was the main factor driving new export orders higher. (…)

CHINA MANUFACTURING PMI CONTRACTS IN MARCH

After a marginal improvement in February, operating conditions faced by Chinese manufacturers deteriorated slightly in March. Total new orders declined for the first
time since December, albeit marginally, which contributed to a slower expansion of output. Meanwhile, employment continued to decline in March, with the pace of job shedding picking up to the sharpest in seven months. On the costs front, deflationary pressures remained strong, with average input prices falling markedly, while prices charged by manufacturers declined for the eighth month running.

After adjusting for seasonal factors, the HSBC Purchasing Managers’ Index™ (PMI™) posted at 49.6 in March, up slightly from an earlier flash reading of 49.2. However, this was down from 50.7 in February and signalled a renewed deterioration in the health of the sector. The drop in the headline index was partially driven by a fall in new business received by manufacturers during March. Though the rate of contraction was only slight, it was the first time that new orders had declined in three months. Anecdotal evidence suggested that subdued market conditions had dampened client demand both at home and abroad. Furthermore, new export work fell for the second month running, albeit at a fractional pace.

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Manufacturing production increased for the third month running in March. However, the rate of expansion eased since February as a result of softer client demand.
Staffing levels declined again in March, thereby extending the current trend to 17 months. Moreover, the rate of job shedding accelerated to the sharpest for seven months, with some companies linking lower workforce numbers to company downsizing policies.

Reduced employment contributed to a further rise in backlogs of work in March, though the rate of accumulation was the slowest since last November. Purchasing activity increased only fractionally in March, with a number of companies attributing the slower rate of growth to sufficient stocks at their units. Inventories of both post- and pre-production goods declined in March, following increases in the previous month.

Manufacturers continued to report a solid decline in input costs in March, despite the rate of reduction easing to the weakest for six months. Output charges also declined again in March, albeit at the slowest rate since last August.