Weekly Report – Dec 6, 2019

The ISM Manufacturing PMI in the US edged down to 48.1 in November of 2019 from 48.3 in October, well below market expectations of 49.2. The figures pointed to the fourth straight month of declining manufacturing activity, amid a steeper decline in new orders and employment. Global trade remains the most significant cross-industry issue. The ISM Non-Manufacturing PMI for the US fell to 53.9 in November of 2019 from 54.7 in the previous month and below market expectations of 54.5. Business activity slowed sharply while new orders and employment increased faster. Service providers hope for a resolution on tariffs and continue to be hampered by constraints in labour resources. The US trade deficit narrowed to US$47.2 billion in October of 2019 from a downwardly revised US$51.1 billion in the previous month, and below market expectations of a US$48.7 billion. It is the lowest trade gap since May of 2018. Imports slumped 1.7% to the lowest value in two years amid falling purchases of pharmaceutical preparations, auto parts, vehicles and cell phones Exports edged down 0.2%. The goods trade deficit with China narrowed 1.1% to US$31.3 billion, as imports fell a meagre 0.2% and exports rose 3.3%.

The European Central Bank kept rates on hold during Mr. Draghi’s final meeting on October 24th, 2019 with the main refinancing rate remaining at 0% and the deposit rate at -0.5%. The bank said it expects key interest rates to remain at their present or lower levels until it has seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2% within its projection horizon. The IHS Markit/BME Germany Manufacturing PMI was revised higher to 44.1 in November 2019 from the previous estimate of 43.8 and compared to October’s final 42.1. The latest reading was the highest since June, but still comfortably inside contraction territory. In addition, buying levels and employment across the manufacturing sector dropped at softer rates, while business sentiment was in positive territory for the first time since June. On the price front, input costs fell by the most since March 2016, amid reductions in the price of chemicals, metals and plastics; and average factory gate charges decreased for the fifth month due to strong competition for new work.

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