Nonmanufacturing PMI 53.9 versus 54.6 estimate

China PMI data came in weaker than expectations:

  • Manufacturing PMI 50.2 versus 50.6 estimates. Lowest level since July 2016
  • exports 46.9 versus 48.   imports 47.6 versus 48.5
  • Employment 48.1 versus 48.3
  • new orders 50.8 versus 52.0
  • inventories of raw materials 47.2 versus 47.8

The tariffs are showing up in weakness in some of the component pieces.  Export orders were up at 51.2 in May.  They are now in contraction territory. Employment is also contracting. New orders are at 50.8 after being as high as 53.8 in May 2018.

  • Nonmanufacturing PMI 53.9 versus 54.6. Lowest level since August 2017.
  • employment 48.9 versus 49.3
  • new export orders 47.8 versus 49.8
  • new orders 50.1 versus 51.0
  • selling price 51.2 versus 51.5
  • input prices 54.9 versus 55.6
  • inventories 47.4 versus 47.1
  • backlogs of work 43.8 versus 43.8

Like the manufacturing data, the nonmanufacturing PMI data is also showing a weakening trend.

  • Composite PMI 53.1 versus 54.1 last month

Disappointment in each of the PMI data for October.

A reading above 50 signals expansion, less than 50 equals contraction.

This should continue to pressure the yuan toward the 7.0000 level over time.   Meanwhile the USD continues to get stronger which will also help to strengthen the USDCNY. 

The EURUSD is looking to test the lows from last week at 1.1335. The low today has reached 1.1337. The low for the year extended to 1.1300 in August. the 200 week moving average is just above that level at 1.1311.

The GBPUSD is moving toward its low for the year from August at 1.26612. 


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