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Manufacturing PMI Takes Centre Stage

The first trading day of September and the final quarter of 2013 begin. The 5 year anniversary of collapse of investment bank Lehman Brothers is a few days away, which was one of the major casualties of the credit crunch, which has driven major economies into recession and the Eurozone to the brink of collapse.

The week begins with a raft of countries releasing their manufacturing data. It began with China, as a major consumer and producer; the slowdown has been a significant concern to analysts. The Chinese purchasing manager’s index (PMI) manufacturing was in expansionary territory beating expectations of 50.6, at 51.0. This surprise to the upside, led to a rally in the industrial metal Copper and the Aussie dollar.

China's manufacturing activity at 16-month high – BBC News

European Manufacturing PMI’s

 

Actual

Consensus

Previous

UK

57.2

55.0

54.8

Greek

48.7

-

47.0

German

51.8

52.0

50.7

French

49.7

49.7

49.7

Italy

51.3

50.8

50.4

Switzerland

54.6

55.9

57.4

Spain

51.1

50.1

49.8

European

51.4

51.3

50.3

Source: Markit
 

Manufacturing data released from the Eurozone was mixed, with only Greek and France below the pivotal 50.0, stating they are in contraction.

The British Recovery Gains Pace

The UK surprised to the upside, beating analysts’ consensus, reinforcing other data points that the UK recovery is beginning to gain traction. This puts doubts over the Bank of England’s “forward guidance” that interest rates will be held at the record low of 0.5% until 2016 (at current projections for their parameters). The improved data points from the UK and concerns over the housing property bubble could lead to a tightening of monetary policy well before the 2016 projection. 

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