|
 Business surveys on Tuesday showed few signs of vigor across
trade-reliant Asia, apart from Japan, with sluggish demand at home
and abroad forcing manufacturers from China to Indonesia to throttle
back production, cut selling prices and shed more jobs.
Euro zone manufacturing growth picked up to a 19-month high in
November but the pace was still relatively modest and with firms
cutting prices for a third month, expectations for further easing
from the European Central Bank on Thursday will solidify.
"The deal has been sealed for the ECB, markets have moved after the
very strong hints and one data point wouldn't change its mind at
this stage," said Jennifer McKeown at Capital Economics. "These
particular data anyway aren't all that encouraging. There is just no
real inflationary pressure."
As part of its battle to boost inflation - nowhere near the Bank's 2
percent target ceiling at just 0.1 percent - the central bank has
been buying 60 billion euros ($63.55 billion) a month of mostly
government bonds since March.
Official data showed euro zone unemployment fell slightly more than
expected in October and Markit's final manufacturing Purchasing
Managers' Index rose to 52.8 in November, above the 50 mark that
separates growth from contraction but not vigorous given the amount
of stimulus.
With firms cutting prices for a third month, there was little to
conflict with the findings in a Reuters poll last week that
suggested the ECB would expand and extend its quantitative easing
program when policymakers meet on Thursday.
The ECB is also highly likely to cut its deposit rate further into
negative territory, effectively increasing the amount banks have to
pay to park money overnight.
Just as global policymakers and investors are factoring in that
extra easing from the ECB, they are bracing themselves for the first
hike in U.S. rates since 2006, which most analysts see coming at the
Federal Reserve's Dec. 15-16 meeting.
British manufacturing growth slowed last month from the rapid pace
recorded in October. And in the latest in a long line of relatively
upbeat data, a similar survey due from the U.S. later on Tuesday is
expected to show a slight pick-up.
DESPONDENT ASIA
There was little in Asia's survey numbers to cheer about.
"Asia's economy looks decidedly wobbly going into year-end. Exports
continue to struggle amid sluggish demand in the West and other
emerging markets," said HSBC economist Frederic Neumann.
China's official PMI fell for a fourth month in a row in November,
hitting its lowest since August 2012, as new export orders dropped
for the 14th month.
A private survey, the Caixin/Markit China PMI, which focuses on
small and mid-sized companies, edged up to its highest reading since
June, but still pointed to a ninth month of contraction.
[to top of second column] |
However, a pickup in services activity in a similar official survey
offered some hope the sector would offset persistent weakness in
"old economy" growth drivers such as manufacturing.
Facing what could be its slowest pace of economic expansion in a
quarter-century, China has slashed interest rates six times in the
past year as part of sweeping stimulus efforts, and more easing is
expected next year.
While the moves may have reduced the risk of a so-called hard
landing for the economy, so far they have yet to show signs of
re-energizing demand.
"With soft growth momentum and deflation pressures creeping up, we
expect the authorities to further ease monetary policy and continue
to implement an expansionary fiscal policy," said economists Li-Gang
Liu and Louis Lam at ANZ bank.
Meanwhile, in the first indication of how Asian trade performed in
November, South Korea's exports fell 4.7 percent from a year
earlier, the 11th month of contraction.
There was much better news out of Japan, where manufacturing firms,
possibly aided by a weak yen, may be producing enough to lift the
world's third-largest economy out of recession.
Manufacturing production expanded by its fastest pace in 20 months
in November as new orders picked up, according to the Markit/Nikkei
Japan manufacturing PMI.
With financial markets on edge ahead of any repercussions should the
Fed go ahead and raise rates, Asian central banks are for the most
part staying pat for now while hinting there is room to ease further
if conditions do not improve next year.
Both Australia's Reserve Bank and the Reserve Bank of India held
rates on Tuesday in widely-expected moves.
($1 = 0.9442 euros)
(Editing by Jeremy Gaunt.)
[© 2015 Thomson Reuters. All rights
reserved.] Copyright 2015 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed. |
