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Macro Roundup (Jun 4)
Jun 4,2018 09:12CST
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Macro Roundup

SHANGHAI, Jun 4 (SMM) – This is a roundup of global macroeconomic news last weekend and what is expected today.

Last weekend

The US dollar index closed at 94.179 last Friday, slightly down over the week. The index registered a six-month high of around 95.02 in the middle of last week and then lost the gains. The strong performance of US nonfarm payrolls further fuelled the anticipation of interest rate hikes but failed to support the US dollar further as the market was already buoyed by upbeat nonfarm payroll data.

LME nickel rose 0.75% last Friday and hit a six-week high at one point given production cuts in China, inventory declines in China and abroad as well as the robust consumption of stainless steel. SHFE copper rose close to 1%, aluminium nudged up while other SHFE metals edged down.

China's Caixin manufacturing purchasing managers’ index (PMI) came in at 51.1 for May, unchanged from April. A reading above 50 indicates expansion, while a reading below that signals contraction. Production growth and new orders picked up slightly from April, while new export sales fell.

"Overall, operating conditions across the manufacturing sector remained stable. The growth in the prices of industrial products has gained momentum, however, the export situation was still disappointing," wrote Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group, a subsidiary of Caixin.

The Eurozone manufacturing PMI stood at at 55.5 in May, unrevised from  the initial reading.

“The eurozone manufacturing sector reported its weakest expansion for 15 months in May. Some of the weakness may have been related to a higher than usual number of holidays during the month, but risks appear tilted towards growth remaining subdued or even cooling further in coming months,” said Chris Williamson, chief business economist at IHS Markit. “Not surprisingly, manufacturers’ expectations of future production have sunk to a 20-month low, underscoring the gloomier economic picture,” he added.

The German manufacturing PMI registered at 56.9 in May, slightly higher than the initial reading of 56.8 but lower from 58.1 in April. This marked the lowest reading in last 15 months

“Capacity constraints have been a big part of the lowdown seen so far in 2018, and May’s survey continued to highlight widespread delays in supply chains and found evidence of this resulting in lost sales. A slowdown in global trade flows has added to the equation, with a sharp deterioration of export order growth to a two-year low the most worrying development to come out of the latest figures,” Phil Smith, principal economist at IHS Markit wrote in the report.

US nonfarm payrolls rose 223,000 in May, significantly better than the expected 188,000, while the unemployment rate fell to an 18-year low of 3.8% in May. The closely watched average hourly earnings metric rose 0.3% month on month in May. Labour force participation fell 0.1 percentage point from April to 62.7% in May.

"The employment this month really underscores, once again, the robust strength of the labor market," said Steve Rick, chief economist at CUNA Mutual Group. "May showed steady momentum in jobs and certainly hit back at any worries among economists who thought hiring was beginning to finally slow after seeing last month's report."

US ISM manufacturing PMI registered 58.7 in May, higher than 57.3 in April.

US Markit final PMI stood at 56.4 in May, down marginally from 56.5 in April.

The number of active US rigs for oil rose 2 units to 861 units over the week ended June 1 with natural gas rigs down 1 unit to 197 units, according to data from Baker Hughes. This brought the overall active rigs up 1 unit to 1,060 units.

Day ahead

Key factors to watch today include the Eurozone Sentix investor confidence index in June, US durable goods order and factory orders in April.

For editorial queries, please contact Daisy Tseng at daisy@smm.cn 
For more information on how to access our research reports, please email service.en@smm.cn


For queries, please contact Frank LIU at liuxiaolei@smm.cn

For more information on how to access our research reports, please email service.en@smm.cn

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