Edge and Odds

The enemy of knowledge is not ignorance, it’s the illusion of knowledge (Stephen Hawking)

It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so (Mark Twain)

Edge and Odds

Invest with smart knowledge and objective odds

EUROZONE MANUFACTURING PMI AT 52.0

Growth of the eurozone manufacturing sector was maintained in April, with the rate of expansion easing only slightly from March’s ten-month high. Although domestic market conditions remained subdued in a number of nations, most benefitted from increases in new export orders.

At 52.0 in April, down from 52.2 in March, the final seasonally adjusted Eurozone Manufacturing PMI® came in a tick higher than its earlier flash estimate of 51.9. The PMI has remained in expansionary territory for 22 months.

image

Eurozone manufacturing production also rose for the twenty-second successive month in April. Although the rate of increase eased slightly since last month’s ten-month high, it remained above the respective average for the opening quarter of the year. New orders rose for the fifth month running.

imageIreland and Spain remained the top performers in April, according to the latest PMI readings, although accelerations in the Netherlands and Italy saw these nations narrow the gap. All four countries reported solid expansions of both new business and production.

Germany reported further expansion, but its overall rate of improvement slowed slightly over the month. German manufacturers saw weaker growth of output, new orders and new export orders.

The Austrian PMI meanwhile signalled broad stagnation following a seven-month sequence of contraction. Positive findings included mild improvements in output and new order volumes, which offset lower employment and stocks of purchases.

France and Greece remained stuck in contraction during April, with the PMI figures in both drifting further from the other nations covered by the survey. France saw output fall at the fastest pace in four months, following a sharper decrease in new order inflows. Meanwhile, the rates of contraction in new orders and production in Greece accelerated sharply to the quickest since the first half of 2013.

New export order inflows at eurozone manufacturers rose for the twenty-second straight month in April. Increases were signalled in almost all of the nations covered – the exceptions being France and Greece – although only Spain and the Netherlands reported accelerated rates of growth.

Manufacturing employment continued to rise during April. Job creation was registered for the eighth straight month, with the pace of increase the highest since August 2011. Headcounts were raised in Germany, Italy, Spain, the Netherlands and Ireland, but reduced in France, Austria and Greece.

Price indicators continued to track higher in April. Input costs rose for the second successive month, following a six-month sequence of reductions, with increases signalled in all of the nations covered bar Austria. Meanwhile, average selling prices ticked higher for the first time since August 2014, reflecting increases in Germany, Italy and Ireland.

CHINA MANUFACTURING PMI DECLINES TO 48.9

Chinese manufacturers saw a further deterioration in operating conditions in April, with total new orders declining at the strongest pace for a year while production levels stagnated. Data suggested that relatively weak domestic demand was the main driver of reduced new business, as new export work picked up in April (albeit marginally). Consequently, employment in the sector continued to decline, while purchasing activity fell at the quickest rate in 13 months. Meanwhile, deflationary pressures intensified in April, with both input and output costs falling at accelerated rates.

Adjusted for seasonal factors, the HSBC Purchasing Managers’ Index™ (PMI™) remained below the neutral 50.0 value at 48.9 in April, down from 49.6 in March. This signalled a deterioration in the health of the sector for the second successive month. Moreover, the pace of deterioration was the strongest seen in a year.

image

Total new business placed at Chinese manufacturers declined for the second month in a row in April. Furthermore, the rate of contraction quickened since March to the strongest in a year. A number of panellists commented on relatively subdued market conditions and an associated downturn in client demand. Data suggested that fewer new orders were largely driven by weaker domestic demand, as new export work increased over the month, albeit at a marginal rate.

Weaker demand conditions led companies to become more cautious with regard to their production schedules, with firms leaving their output unchanged in April. This contrasted with increased output in the opening three months of the year.

Purchasing activity meanwhile declined for the first time since January. Though moderate, the rate of reduction was the quickest since March 2014, with a number of respondents attributing the fall to fewer new orders. Consequently, stocks of inputs declined for the second month in a row and at a faster rate than in March. Inventories of finished goods were also depleted in April, though the rate of reduction was similar to that seen in the previous month and only slight.

On the price front, average cost burdens faced by Chinese goods producers fell for the ninth successive month. Moreover, the rate of deflation accelerated to a sharp pace. In line with the trend for input costs, companies cut their selling prices again in April and at a solid rate.