Sharechat Logo

While you were sleeping: Gloomy manufacturing data

Friday 21st September 2012

Text too small?

The latest manufacturing data from the US, China and Europe did little to inspire confidence in the recovery of the global economy.

Markit said its US "flash," or preliminary, manufacturing Purchasing Managers Index was at 51.5 in September, unchanged from August. The index averaged 51.5 in the three months to September, down from the 54.2 in the previous quarter - its weakest performance since the third quarter of 2009.

"I don't think the economy is going anywhere fast," Ryan Sweet, a senior economist at Moody's Analytics in West Chester, Pennsylvania, told Reuters. "The jobs market is still very difficult and manufacturing, which was a key pillar of the recovery, is beginning to crack."

Other reports released today also dimmed the outlook. Jobless claims were higher than expected, declining only by 3,000 in the week ended September 15 to 382,000, according to Labor Department figures.

Separately, factory activity in the Mid-Atlantic shrank for a fifth straight month in September.

In late afternoon trading in New York, stocks were mixed: the Dow Jones Industrial Average rose 0.07 percent, the Standard & Poor's 500 fell 0.24 percent and the Nasdaq Composite Index declined 0.28 percent.

In Europe, the Stoxx 600 Index edged 0.2 percent lower from the previous close, while the euro was last 0.7 percent weaker at US$1.2955 amid disappointing EU manufacturing data.

The Markit Eurozone PMI Composite Output Index fell to 45.9 in September, from 46.3 in August, according to preliminary data. The index signalled that the private sector economy contracted for the twelfth time in the past 13 months, with the rate of decline accelerating slightly to reach the fastest since June 2009, according to Markit.

The median estimate of economists surveyed by Bloomberg had called for a reading of 46.6.

And in China, the manufacturing industry will contract in September, according to the preliminary readings of a purchasing managers' index by HSBC Holdings and Markit.

Meantime, the EU's debt crisis continues to keep investors on the defensive. Demand was muted for Spain's debt auction today. Spain sold 3.94 billion euros of new benchmark notes due in October 2015 at an average yield of 3.85 percent, compared with 3.68 percent at the previous auction on September 6, according to Bloomberg.

Demand fell to 1.56 times the amount sold, down from a so-called bid-to- cover ratio of 1.76 times. The country also sold 858 million euros of 10-year bonds.

The auction results are being taken as an indication that investors believe the country should make a request for an EU bailout sooner rather than later.

"The longer Spain prevaricates in terms of requesting a bailout the greater the chance that the bailout premium, as it were, will be priced out of the market," Richard McGuire, a senior fixed-income strategist at Rabobank International in London, told Bloomberg. "Yields will rise and the curve will flatten back, forcing the government to make that request."

BusinessDesk.co.nz



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

SML - Synlait Milk Limited - Trading Halt of Securities
AIA - Auckland Airport announces board chair changes
AIA - Auckland Airport announces board chair changes
CEN - Tauhara commissioning progress update
FPH initiates voluntary limited recall
March 28th Morning Report
KFL Celebrates 20 Years of Excellence in Investment Mgmt.
SVR - Savor FY24 Earnings Guidance & Change in Banking Partner
NZK - NZ King Salmon Investments Limited FY24 Results
March 27th Morning Report