Chinese industry has revived. Europe is waiting for its data

The private Caixin PMI for the Chinese economy released this morning increased to 50.8 points, which means that the activity of factories in the Middle Kingdom has increased, as a result of, among others, more new orders. However, business confidence for 2024 remains subdued. The last session on Wall Street ended with moderate declines. SP500 lost nearly 0.3%. and Nasdaq Composite over 0.5 percent. The EUR/USD rate makes a technical correction and drops to 1.1030. Crude oil has been gaining since the morning. WTI is higher by over 1.5%. and is approaching the ceiling of USD 73 per barrel.

Chinese industry has revived

The Caixin/S&P Global manufacturing PMI increased to 50.8 at the end of 2023 from 50.7 in November, the best result in 4 months. The given number exceeded analysts’ forecast, which was around 50.4. The manufacturing sector came under pressure from weak demand in 2023, while a slowdown in the real estate market, geopolitical factors and limited consumer spending weighed on the post-pandemic recovery.

At the end of last year, Chinese politicians pledged to adjust their policies to support economic recovery in 2024. The market is waiting for further stimulus measures.

The Caixin manufacturing PMI contrasts with official results released on Sunday. The data showed that manufacturing activity in December contracted at a faster pace and by more than expected. Services, in turn, were slightly stronger than a month earlier and the index increased from 50.2 points. up to 50.4 points

Weaker demand caused factories to cut jobs for the fourth month in a row, the highest pace since May. Although production costs continued to rise at the end of the year, the inflation rate in November fell to its lowest level in many months (-0.5%) and indicated a decline in prices. Not only are consumer prices falling, producer prices have also recently fallen year-on-year, as evidenced by the PPI index (-3%).

Europe is waiting for industry data

On Wall Street, Friday’s session ended with moderate declines. Of the three main benchmarks, the Nasdaq Composite suffered the largest losses, falling by 0.56%. In Europe, we saw slight increases and the DAX ended the year with a result of +0.3%. The currency market traded calmly. The rate of the main currency pair fell for the second day in a row, reaching lows this morning at 1.1020.

Today, the focus will be on the final PMI readings from Europe for the manufacturing sector, and in the afternoon similar data will be presented in the United States. This week, the most important publication will be Friday’s report on the US labor market, which will show the condition of the labor market in December.