Macro Roundup (Dec 10)

SHANGHAI, Dec 10 (SMM) – This is a roundup of global macroeconomic news last weekend and what is expected today.

Last weekend

LME and SHFE base metals, except for zinc, ended in the black on Friday night. LME aluminium jumped over 1%, nickel climbed 0.9%, tin gained 0.4%, copper edged up 0.2% and lead nudged up.

SHFE aluminium rose 0.55%, lead advanced 0.35% and nickel grew 0.28% with tin up 0.16% and copper up 0.12%.

The US dollar fell on Friday aftere weaker-than-expected monthly job report was released, suggesting that the Federal Reserve will tighten monetary policy at a slower rate than previously forecast.

Nonfarm payrolls increased by 155,000 for November while the unemployment rate held at 3.7%, its lowest since 1969, the Labor Department reported on Friday. Economists surveyed by Dow Jones expected payroll growth of 198,000 and the jobless rate to hold steady.

On Thursday November 6, The Wall Street Journal reported that Fed officials are mulling a watch-and-wait approach after a potential rate increase at their meeting in December. This boosted expectations that the US central bank may be ready to signal a pause in its three-year rate hike efforts and weighed on the greenback.

China reported far weaker than expected November exports and imports, showing slower global and domestic demand and raising the possibility that authorities will take more measures to keep the country's growth rate from slipping too much.

November exports only rose 5.4% from a year earlier, Chinese customs data showed on Saturday, the weakest since a 3% contraction in March, and well short of the forecast increase of 10%.

Analysts say that the export data showed that the "front-loading" impact as firms rushed out shipments to beat planned US tariff hikes faded, and that export growth is likely to slow further as demand cools.

Customs data showed that annual growth for exports to all of China's major partners slowed significantly. Exports to the US rose 9.8% in November from a year earlier, compared with 13.2% in October.

Imports grew 3% and expanded China's trade surplus to $44.7 billion from $34.8 billion.

China's foreign exchange (forex) reserves edged up in November after dropping for three consecutive months, official data showed on Friday. Reserves stood at $3.0617 trillion at the end of November, up 0.3% from October, according to data from the People's Bank of China. The improvement came as an encouraging sign amid concerns about capital outflows and a weakening yuan.

China's consumer price index (CPI), a main gauge of inflation, rose 2.2% year on year in November, down from 2.5% in October, the National Bureau of Statistics (NBS) said on Sunday. Food prices climbed 2.5% year on year, accounting for a 0.49-percentage-point increase of the overall CPI growth, the bureau said. 

On a monthly basis, the CPI dipped 0.3% from October. In January-November, the CPI gained 2.1% from the previous year, well below the government's target of 3% for 2018, data from the NBS showed.

Sunday's data also showed that the producer price index (PPI), which measures costs for goods at the factory gate, rose 2.7% year on year in November, with the growth declining for five consecutive months.

The eurozone grew at its slowest pace in four years in the third quarter of 2018, while employment growth also eased during the period, data released by the European Union statistics agency showed. The figures confirmed earlier estimates from Eurostat.

Eurozone gross domestic product (GDP) rose by 0.2% in the three months from July to September, Eurostat said on Friday. This was the slowest rate of economic growth since the second quarter of 2014 and slowed from growth in the second quarter.

On the year, the GDP growth rate in the 19-country currency bloc was 1.6%, Eurostat said, lowering its earlier estimate of a 1.7% expansion.

The number of people employed in the eurozone increased by 0.2% quarter-on-quarter and by 1.3% year-on-year. This compared with rates of 0.4% and 1.5%, respectively, in the second quarter of 2018.

The economy of Germany, the eurozone's largest, contracted by 0.2% on the quarter, due in part to bottlenecks in getting new cars certified under tougher emissions standards. Official figures show that factory production in Germany declined in October in another sign that Europe's largest economy may be slowing. The German economic ministry said on Friday that industrial production dropped 0.5% in October over September after adjusting for seasonal and calendar factors. Production gained 1.6% on the year.

Day ahead

Economic data slated for release today include Germany’s trade balance for October, China’s total social financing (TSF) and M2 money supply for November, the eurozone’s Sentix investor confidence index for December and the US Job Openings and Labor Turnover Survey (JOLTS) results for October.