Macro Roundup (Jul 1)

SHANGHAI, Jul 1 (SMM) – This is a roundup of global macroeconomic news last weekend and what is expected today.

Last weekend

The US dollar edged lower last Friday, as US economic data confirmed the likelihood of a July interest rate cut. 

US personal consumption expenditures (PCE), a key metric of household spending, grew 0.4% on a seasonally adjusted basis in May from the previous month, said the Commerce Department on Friday. The core PCE price index rose 0.2% in May, as expected, reinforcing investor expectations that the Federal Reserve will cut rates by 25 basis points to 2.25% at the next meeting.

The US and China agreed to resume trade talks, easing an extended dispute that slowed global economic growth.

"We're right back on track. We'll see what happens," US President Donald Trump said after the meeting with Chinese President Xi Jinping wrapped. 

Base metals ended mostly lower as LME tin lost 0.5%, lead fell 0.36%, copper dipped 0.02%, aluminium fell 0.25%, nickel dropped 0.47%, while zinc jumped 0.26%. SHFE tin slid 0.91%, aluminium and lead fell 0.25%, nickel eased 0.42%, while zinc rallied 0.1%, and copper nudged up.

China's factory activity shrank more than expected in June, an official survey showed on Sunday. 

The purchasing managers' index (PMI) for China's manufacturing sector came in at 49.4 in June, flat with that in May and compared with the expected 49.5, the National Bureau of Statistics (NBS) said.

A reading above 50 indicates expansion, while a reading below reflects contraction.

The sub-index for production, a major factor used in calculating PMI, edged down 0.4 to 51.3 in June, while the sub-index for new orders went down to 49.6.

"Still, production continued expansion on the whole and industry upgrades proceeded," NBS senior statistician Zhao Qinghe said. "Among the 21 sectors surveyed, 13 posted readings of expanding production."

The official nonmanufacturing purchasing managers’ index (PMI), a measure of activity outside factory gates, edged down to 54.2 in June from 54.3 in May. 

An analyst with the China Logistics Information Center, Wen Tao, attributed the slowdown in market demand growth to monthly factors, such as heavy rainfalls in southern regions, the Sichuan earthquake and continuous high temperatures in northern parts of the country.

PMI readings in the first half of the year pointed to the downward pressure on the manufacturing sector, but the broader economy will remain steady in the second half of the year, Wen said.

"There are many expansionary policies and stronger counter-cyclical adjustments," Wen said. "We will continue to see the effects of policies to cut taxes and fees, stabilize investment and the financial sector on providing strong support for structural adjustment, efficiency improvement and growth."

Day ahead

Economic data slated for release today include China’s Caixin manufacturing PMI for June, Germany’s actual retail sales for May, unemployment and Markit manufacturing PMI for June, as well as the US manufacturing PMI by the Institute for Supply Management (ISM) for June.