Call us on 1300 794 893

Business News

5 things you need to know today

| More

Published on: Tuesday, July 04, 2017

First week of a new month means PMI Day – when the forward-looking Purchasing Managers’ Indices (PMIs) are released around the world. China was the first nation out of the blocks, reporting its fastest factory growth in three months. The Caixin/Markit Manufacturing Purchasing Managers’ index rose to 50.4 in June, better than expected, and a rise from May’s 49.6 reading – which was the worst in 11 months. Any reading over 50 signals growth, so the June figure is an encouraging sign for China’s manufacturing sector after a tepid few months.

Europe followed with a belter of a PMI report, which showed that the Eurozone’s factory sector is growing at its fastest rate in over six years. The surge is being driven by a boom in Germany – where factory activity is growing at its fastest pace in more than six years – while solid expansion in France, Italy and Spain helped to deliver the strongest manufacturing expansion since 2011.

The Markit Eurozone manufacturing PMI came in at 57.4 in June, up from May’s 57.0, and beating economists’ consensus forecasts. More importantly, the Eurozone expansion was across the board, with every country – even Greece – reporting faster factory growth in June, while Austria and the Netherlands were out in front with Germany.

Unfortunately, the UK did not get the memo, with British manufacturing activity slowing in June to a three-month low. The UK manufacturing PMI dropped to 54.3 in June, well below expectations of a reading of 56.5. Companies reported that production and new orders did grow in June, but at a slower rate than in May.

In the US, the ISM manufacturing index rose to 57.8 in June, compared with 54.9 in May, well ahead of forecasts, and marking its highest level since 2014. It was the index’s tenth straight month above 50: American manufacturers are growing at the fastest pace in almost three years, reflecting improved economic conditions both at home and abroad. 

Also in the US, drilling-rigs-in-action numbers fell last week for the first time in 24 weeks, breaking the record streak of increases. The oil-rig count fell by two to 756, according to oilfields services heavyweight Baker Hughes in its weekly report, while the gas-rig count rose by one to 184. With miscellaneous rigs down one to zero, the total rig count fell by one to 940.

Rig counts have been rising over the past 12 months, with the addition of a flood of new units due to the rapid growth in American shale production. The US oil-rig count is up 121.7% in the last year and up 139.2% since bottoming out at 316 in May 2016. While the current oil rig total is still less than half the 1,600 mark it reached in October 2014, it has grown steadily for 13 months. At 184, the US active gas-rig count is up 106.7% in the last year, and up 127.2% since bottoming out at 81 in August 2016.

New on Switzer

blog comments powered by Disqus
Pixel_admin_thumb_300x300 Pixel_admin_thumb_300x300 Pixel_admin_thumb_300x300 Pixel_admin_thumb_300x300 Pixel_admin_thumb_300x300 Pixel_admin_thumb_300x300