May 20, 2018

Euro zone manufacturing cools off in April but remains warm

03 May 2018, 01:38 | Kenneth Drake

Global demand for Chinese manufactured goods just fell for the first time in more than a year

GBPUSD Falls to 4 Month Low After Weak UK Manufacturing PMI

According to the PMI index updated on Wednesday, manufacturing performance increased to 51.6 in April 2018 from 51 in March.

Adding to signs that global demand is softening, the new export orders subindex declined for the first time in 17 months. Greater production requirements stimulated job creation and encouraged companies to engage in input buying. Housebuilding led the way, with growth in April among the strongest seen over the past two-and-a-half years.

The increase in new business was the first recorded by the PMI survey so far in 2018.

"While temporary factors make it hard to gauge underlying momentum, the recovery from March's low point is somewhat underwhelming and provides an indication that the construction sector has been treading water at the very best in recent months".

The reading for April was the weakest since March 2017.

"April's data provides some relief after last month's weather disruption, especially for the housing sector after a lacklustre few months".

There was nothing in Tuesday's PMI report to suggest British factories - which account for around a tenth of overall economic output - will regain the vigour they enjoyed in late 2017, when a recovery in the euro zone boosted British manufacturing.

Manila: London copper futures recovered from their weakest level in almost a month on Wednesday after a private survey showed growth in China┬┤s manufacturing sector unexpectedly picked up in April, brightening the demand outlook in the top user of the metal.

Inflationary pressures moderated for the second month in a row, with the softest increases for input costs and output charges reported since September 2017 and July 2017, respectively, the survey said.

The poor reading in part reflected a weakening in the pace of expansion of new work from overseas, the report said, with growth of new export business hitting a 10-month low.

Meanwhile, expectations of interest rate cuts have been mounting on the Reserve Bank of India (RBI) in the wake of declining retail inflation and the need to fuel growth momentum. It is based on several indicators including output, new orders, backlogs, output and input prices, suppliers' delivery times, stocks of finished goods, purchases, employment and future production.

Aashna said on the bright side, business sentiment towards the 12-month outlook for output was at the strongest level since October 2013.

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