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China November PMIs: Manufacturing 52.1 (expected 51.5) & Non-manufacturing 56.4 (expected 56.0)

  
Analysis, Economy
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These are the official China PMIs for the month, from the country’s National Bureau of Statistics.

Manufacturing 52.1 big beat and at its highest since September 2017

  • expected 51.5, prior 51.4

Non-manufacturing 56.4 also for a beat, expanded for the ninth straight month, best since June 2012

  • expected 56.0, prior 56.2

Composite 55.7

  • prior 55.3
Via Citi:
  • overall production should carry on the momentum
  • export orders were most likely still robust ahead of Western holiday seasons, and domestic demand may continue to hold up
(Citi comments from a pre-releases note)

Eurozone November final consumer confidence -17.6 vs -17.6 prelim

  
Analysis, Economy

November final consumer confidence -17.6 vs -17.6 prelim

  • Latest data released by Eurostat – 27 November 2020
  • Economic confidence 87.6 vs 86.0 expected
  • Prior 90.9; revised to 91.1
  • Industrial confidence -10.1 vs -10.9 expected
  • Prior -9.6; revised to -9.2
  • Services confidence -17.3 vs -16.3 expected
  • Prior -11.8; revised to -12.1

Euro area economic confidence slumped on the month amid tighter restrictions across the region and that highlights the struggle with the recovery towards the year-end.

As the restrictions look set to continue until the closing stages of the year, it makes for a very uncertain outlook going into Q1 2021 if the virus situation isn’t contained.

Singapore data: Q3 GDP +9.2% q/q, still down y/y

  
Analysis, Economy

Third quarter economic growth in Singapore rebounded q/q, ahead of Q2 but missed expectations:

 

  • Q3 GDP +9.2% q/q (seasonally adjusted rate) vs. expected 9.5%, prior 7.9%
  • Q3 GDP -5.8% y/y vs. expected -5.5%, prior -7.0%

 

More:

The Ministry of Trade and Industry has revised their 2020 GDP growth forecast to -6.5% to -6% (previous forecast -7% to -5%)

 

  • forecasts 2021 GDP growth of +4% to +6%
  • says 2020 sales volumes in consumer-facing sectors likely to remain below last year’s levels
  • says economic activity in consumer-facing sectors not likely to return to pre-covid levels even by end-2021
  • 2020 NODX forecast adjusted upwards to +4% to +4.5%
  • 2021 NODX forecast 0% to +2%
  • 2020 trade merchandise forecast adjusted upwards to -7.5% to -7%
  • 2021 trade merchandise forecast +1% to +3%

 

The forecasts are being bumped up a little as officials see an end in sight for COVID-19 outbreaks.

Japan GDP preliminary for Q3. GDP (sa) 5.0% q/q (vs. expected 4.4%)

  
Analysis, Economy

Japan economic growth for the July, August, & September months quarter. Better than was expected.

  • first expansion in 4 quarters
  • fastest growth since 1980
  • GDP sa 5.0% q/q vs. expected 4.4%, prior -7.9%
  • GDP annualised sa 21.4% q/q vs. expected 18.9%, prior -28.1%
  • GDP nominal 5.2% q/q vs. expected 4.6%, prior -7.6%
  • GDP deflator (an inflation indication) 1.1% vs. expected 1.0%, prior 1.3%
  • Private consumption 4.7% vs. expected 5.2% q/q, prior -7.9%
  • Business spending -3.4% vs. expected -2.9%, prior -4.7%

A miss for consumption but nevertheless its best result in a year, rises for the first time in 4 quarters.

Yen not doing a real lot on the data. The USD has lost a few points against EUR, AUD and such as equity index futures have risen on Globex Sunday evening Chicago time.

Germany Ifo: Industrial production expectations have weakened somewhat for the coming months

  
Analysis, Economy

That is to be expected given the resurgence of the virus in Europe

Not to mention the tighter restrictions being introduced by many countries across the region to deal with the second wave of the pandemic.
If anything, this just summarises that the September industrial production release at 0700 GMT will be of little importance as it is very much a lagging data point at this stage.

European Commission cuts Eurozone 2021 GDP forecast to +4.2% from +6.1%

  
Analysis, Economy

The European Commission publishes its latest forecasts for the euro area economy – 5 November 2020

  • Eurozone 2020 GDP forecast -7.8% (previously -8.7%)
  • Eurozone 2021 GDP forecast +4.2% (previously +6.1%)
  • Eurozone 2022 GDP forecast +3.0
  • Expects Eurozone economy to contract by 0.1% q/q in Q4
  • Eurozone inflation 0.3% in 2020
  • Eurozone inflation 1.1% in 2021
  • Eurozone inflation 1.3% in 2022
The commission adds that the technical assumption for the forecasts is that there will be no trade deal between the EU and UK once the Brexit transition period ends on 31 December. Adding that the forecasts are surrounded by ‘exceptional uncertainty’.
EC
Given recent virus developments, the changes to the projections are very much expected but these are still relatively optimistic in my view. I expect far worse projections given the tigther virus restrictions so the forecasts above may well be outdated.
Anyway, this serves as an anecdote that if the virus situation doesn’t get any better in the coming year, we are going to keep rolling back this downgrade update every quarter.

Eurozone October final services PMI 46.9 vs 46.2 prelim

  
Analysis, Economy

Latest data released by Markit – 4 November 2020

  • Composite PMI 50.0 vs 49.4 prelim
The preliminary report can be found here. Business activity in the euro area stagnated last month on the back of a two-paced economy, with the manufacturing sector holding up – largely due to Germany – while services activity slumped.
The resurgence of the virus in the region is the main detriment to start Q4 and amid tighter restrictions being introduced over the past two weeks, the economic outlook going into the year-end doesn’t look good.
All in all, this just builds more support for the ECB to ease further next month.
Markit notes that:

(more…)

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