Edge and Odds

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Edge and Odds

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EUROZONE MANUFACTURING PMI SHOWS FASTER EXPORTS

The growth rate of the eurozone manufacturing sector remained lacklustre in February. At 51.0, the final seasonally adjusted Eurozone Manufacturing PMI® was unchanged from January’s six-month high and below the earlier flash estimate of 51.1. The rate of expansion in manufacturing production was also the same as in the prior month, despite a slight uptick in growth of new order inflows to a seven-month high. However, the rate of increase in total new business remained only moderate, as subdued domestic market conditions offset accelerated growth in new export orders.

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Manufacturing employment edged higher for the sixth straight month in February, with the rate of jobs growth the best during that sequence. Subsequently, backlogs of work were broadly unchanged over the month.

Price pressures remained on the downside during February. Lower oil prices continued to filter through to costs, leading average purchase prices to decline
sharply again. Indeed, the rate of deflation in average input costs was only moderately less steep than January’s five-and-a-half-year record. Meanwhile, average selling prices decreased for the sixth straight month, mainly due to lower costs, subdued market conditions and rising competition.

(…) Output growth in Spain slowed slightly over the month but, with new order inflows improving, companies were still encouraged to raise employment for the fourteenth straight month. The other nations to signal improved manufacturing performances in February were Italy, Germany and the Netherlands. All three countries reported modest growth of production. Rates of output expansion slowed in Germany and the Netherlands, although Germany registered a slight acceleration in new order growth. Output rose at the fastest pace for eight months in Italy, as new order inflows returned to growth principally led by a strong export performance.

Manufacturing employment rose only marginally in Germany and fell in the Netherlands, but grew in Italy at the quickest pace since last April.

PMI readings for France, Greece and Austria all signalled contractions in February, with France sinking back to the bottom of the eurozone PMI ranking table. These nations also reported concurrent declines in production and new orders, leading to further job losses in France and Austria. The news on the employment front was slightly better for Greece, with workforce numbers rising for the third successive month.

CHINA MANUFACTURING PMI REVEALS LOWER EXPORTS

Manufacturers in China saw a renewed improvement in overall operating conditions in February, with output and total new orders both expanding at faster rates.
However, latest data indicated that external demand was relatively weak, with new export business declining for the first time in 10 months. Meanwhile, average input costs declined sharply over the month, as companies to benefit from lower costs for oil and oil related products, which contributed to a solid fall in prices charged.

After adjusting for seasonal factors, including the recent Chinese New Year, the HSBC Purchasing Managers’ Index™ (PMI™) posted at 50.7 in February, compared to the earlier flash reading of 50.1. This was up from January’s reading of 49.7, and signalled the first improvement in the health of the sector since last October, albeit marginal.

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The renewed improvement in overall operating conditions was supported by a stronger expansion of in February. Though modest overall, it was the quickest increase in production since last August. According to panellists, greater client demand led firms to raise output over the month, as highlighted by a stronger expansion of total new orders. Data suggested that firmer domestic demand had helped to boost new business, as new export work declined moderately for
the first time since April 2014.

Chinese manufacturing employment declined again in February. That said, the rate of job shedding eased to a fractional pace that was the slowest in the current 16-
month sequence. Meanwhile, increased new orders contributed to a greater amount of unfinished business in February, with the rate of expansion quickening
slightly since the start of the year.

Stronger client demand encouraged the first increase in purchasing activity since last October in February. However, the rate of growth was only slight. Greater
purchasing activity contributed to a renewed increase in inventories of inputs in February, albeit modest. A number of monitored companies also mentioned
purchasing and storing more inputs to take advantage of lower prices for some raw materials.

Chinese goods producers saw a further decline in average input costs in February. The rate of deflation remained sharp, despite easing since January’s 70-month record. Prices charged fell for the seventh successive month and at a solid rate.

China’s official PMI:

February’s PMI, a gauge of nationwide manufacturing activity, rose slightly to 49.9 from 49.8 in January, according to a statement by the China Federation of Logistics and Purchasing, which releases the data with the National Bureau of Statistics. This was just above the median forecast by a Wall Street Journal poll of eight economists.

The February subindex measuring new orders rose to 50.4 from 50.2 in January, the input-price subindex rose to 43.9 from 41.9, and the production subindex fell to 51.4 from 51.7, the statement said.

The PMI rose for the first time in four months in February, a month when it tends to fall as a result of seasonal weakness, noted an analyst with China’s National Bureau of Statistics. “This reflects modest recovery in domestic demand,” Zhao Qinghe, a senior analyst of the statistics bureau, said in a statement accompanying the data releases.