Macro Roundup (Dec 4)

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

Last night

LME base metals ended in the black across the board overnight with tin being the best performer, up 2.3%. Zinc jumped 1.6%, aluminium rose 1.2%, nickel advanced 0.9%, copper climbed 0.8% and lead gained 0.4%.

SHFE base metals, however, ended in mixed territory. Zinc increased by 0.8%, tin crept 0.7% and aluminium edged up 0.1% while copper and lead slid 0.2%, and nickel dropped close to 0.4%.

The US dollar fell broadly at the start of the week, as currencies battered by trade tensions between the US and China staged a comeback after leaders from the two countries declared a temporary truce on tariffs.

China's Caixin manufacturing purchase managers’ index (PMI) for November released on Monday, ticked up to 50.2 from 50.1 in October, indicating a slight expansion of the economy.

Domestic demand in manufacturing rebounded, while external demand remained depressed last month, said Zhong Zhengsheng, chairman and chief economist at Caixin Insights. Production slowed last month, but companies seemed unfazed, capital turnover improved slightly, and upward pressure on industrial product prices eased, Zhong explained, saying "China's economic growth is weak, but is not greatly deteriorating".

US manufacturing activity picked up in November, according to data from the Institute for Supply Management (ISM), though a gauge of prices paid tumbled from a month earlier.

ISM's US manufacturing index rose to 59.3 in November from 57.7 in October, topping economists' expectations for a reading of 57.6. A reading above 50 indicates expansion in the sector.

A sub-index of prices paid fell to 60.7 from 71.6 in October, coming in well below estimates for a reading of 70. Gauges of new orders and employment rose.

Separate figures on Monday from financial data firm IHS-Markit showed the pace of growth across factories slipped to a three-month low, though a gauge of new orders climbed higher.

The US manufacturing PMI fell to 55.3 from 55.7 in October, the lowest since August and down slightly from the preliminary reading for November.

Commenting on the PMI data, Chris Williamson, chief business economist at IHS-Markit, said, "Despite the headline PMI slipping to a three-month low, November saw manufacturers enjoy another encouragingly solid month of improving business conditions."

"Dig deeper behind the headline number and the picture brightens further. New orders rose at the fastest rate for six months, prompting manufacturers to continue to expand capacity to meet demand. The pace of job creation remained among the highest seen over the past decade," Williamson added.

Growth in Germany's manufacturing sector slowed to its lowest in two and a half years in November as new orders contracted at the fastest rate in four years.

Markit's PMI for manufacturing, which accounts for about a fifth of the economy, fell to 51.8, from 52.2 in October. That was slightly higher than a preliminary reading of 51.6.

"With the car industry still struggling and geopolitical uncertainties affecting client demand, manufacturers reported a deepening decline in new orders, and export sales in particular," said Phil Smith, principal economist at IHS-Markit.

Day ahead

The American Petroleum Institute (API) today will report inventory levels of US crude oil, gasoline and distillates stocks as of Friday November 30.