Archives of “Economy” category

rss

RBA cuts cash rate by 25 bps from 1.25% to 1.00%

  
Analysis, Economy
#  #  #  #  #

RBA announces its latest monetary policy decision – 2 July 2019

  • Prior 1.25%
  • Says rate cut will help to make inroads into spare capacity
  • Says rate cut will help achieve progress towards inflation target
  • Says rate cut is to support jobs, bring inflation back in-line with target
  • Says rate cut will help quicken reduction in unemployment
  • Notes that inflation pressures are subdued across the economy
  • Sees underlying inflation at 2% in 2020
  • But expects inflation to pick up, boosted by petrol prices in Q2
  • To adjust policy if needed to support growth, inflation
  • Central scenario for Australian economy remains reasonable
  • Tentative signs of house prices stabilising in Sydney, Melbourne
  • AUD at the lower end of narrow range
More details to come…

The global economy needs more than just a trade truce

  
Analysis, Economy

Unless US and China can strike a trade deal (and soon), the outlook remains bleak for the global economy

PMI Manufacturing

The above highlights the June manufacturing PMI releases from today and you can easily spot a theme that we’re seeing worsening conditions globally. Even if you factor in releases from Southeast Asian i.e. Malaysia, Indonesia, Philippines, they’re mostly also lower and showing the same trend as per the above.
Despite some improvements in Germany, Turkey and South Africa, all three readings are still in contraction territory and aren’t providing any indication of any significant improvement in manufacturing activity in the coming months.
So, a trade truce may be good on paper but what the world really needs is a trade deal and less tensions. Otherwise, it’s hard to gather much optimism from the weekend when you start looking at the bigger picture.

PBOC’s Yi: China growth rate is right around 6%

  
Analysis, Economy

Comments from Yi in Finland:

  • Shrinking labour market supply is one factor in slower growth
  • Increasing environmental standards also hurting growth
  • China labour supply peaked in 2010-2011
  • Growth rate will moderate as economy grows
  • Current account surplus to stay below 1% of GDP
  • Economy is basically driven by domestic demand
  • Consumption is now 2/3 of growth
  • China still has plenty of savings

Nothing surprising in the comments.

Eurozone June final manufacturing PMI 47.6 vs 47.8 prelim

  
Analysis, Economy
#  #  #  #  #

Latest data released by Markit – 1 July 2019

Slight downtick to the final release sees the overall euro area reading fall a little in June compared to the 47.7 print in May. That said, this is more or less within initial estimates so it’s not really giving much new information about the sluggish manufacturing sector in the region seen in Q2 2019.

China June Caixin Manufacturing PMI 49.4 (vs. 50.1 expected and 50.2 prior)

  
Analysis, Economy

Terrible result, follows the poor results from official survey released earlier.

  • Output and new work intakes decline for first time since January
  • Renewed reduction in export sales
  • Goods producers cutback input purchasing and payroll numbers
Comments
  • the second lowest since June 2016
  • clear contraction in the manufacturing sector
  • subindex for new orders slid into contractionary territory, pointing to notably shrinking domestic demand
  • new export orders returned to contractionary territory, but was better than the levels seen from last April to last December. Front-loading by exporters was likely to support this gauge as the China-U.S. trade relationship was under great uncertainty. 
  • output subindex fell into contractionary territory

Bank of Japan (BOJ) Tankan report for Q2 2019. Manufacturing worse than expected.

  
Analysis, Economy

Quarterly survey from the BOJ

  • Tankan Large Mfg Index: 7 vs. expected 9, prior was 12 – worse than expected
  • Tankan Large Mfg Outlook: 7 vs. expected ,6 prior was 8
  • Tankan Large Non-Mfg Index: 23 expected 20, prior was 21 – better than expected
  • Tankan Large Non-Mfg Outlook: 17 vs. expected 19, prior was 20
  • Tankan Large All Industry Capex: 7.4% vs. expected 8.1%, prior was % 1.2
  • Tankan Small Mfg Index: -1 vs. expected 2, prior was 6 – worse than expected
  • Tankan Small Mfg Outlook: -5 vs. expected -2, prior was -2
  • Tankan Small Non-Mfg Index: 10 vs. expected 10, prior was 12
  • Tankan Small Non-Mfg Outlook: 3 vs. expected 6, prior was 5
The large Manufacturing result is the worst in 3 years. Trade war, global slowdown repercussions.
Go to top