China Manufacturing Slumps; New Zealand Business Confidence Up; BOJ Holds Rates Steady

Business confidence in New Zealand picked up after hitting a 10-year low last month, according to a survey by ANZ. China’s manufacturing sector continued to dwell in the doldrums in October, with sentiment among factory operators remaining in negative territory for the sixth month in row. The Bank of Japan maintained is policy rates on Thursday but it signaled further monetary easing going forward.
James Hyerczyk
Global Economy

A couple of U.S. economic reports shared the spotlight with the Federal Reserve on Wednesday. This trend carried over into the Asia Pacific region with New Zealand delivering a report on business confidence. Australia followed up with a report on building approvals and China released numbers on manufacturing and services. Finally, the Bank of Japan followed the Fed with its own decisions on interest rates and monetary policy.

United States

U.S. private employment growth showed modest acceleration in October on the strength of service-sector gains, but goods producers cut jobs for a second straight month, a report by a payrolls processor showed Wednesday.

Employers added 125,000 jobs last month, the ADP National Employment Report showed, slightly topping the median forecast in a Reuters poll for a gain of 120,000 jobs. The increase came as private payrolls growth in September was revised down to a four-month low of 93,000 from an originally reported 135,000 increase.

U.S. Gross Domestic Product, the broadest measure of the U.S. economy, grew faster than expected in the third quarter, but slowed slightly as business investment continued to decline.

The Commerce Department said Wednesday that economic activity grew at an annualized rate of 1.9% in the third quarter, down slightly from the 2% pace in the second quarter. Economists polled by Dow Jones had expected the first look at third-quarter economic growth to come in at 1.6%.

New Zealand

Business confidence in New Zealand picked up after hitting a 10-year low last month, according to a survey by ANZ. The bank said a net 42 percent of respondents still reported that they expected general business conditions to deteriorate in the year ahead. But that was a 12-point improvement from the 54 percent figure in its previous survey.

Australia

The total number of building approvals issued in Australia was up a seasonally adjusted 7.6 percent on month in September, the Australian Bureau of Statistics said on Thursday-coming in at 14,004. That beat expectations for a flat reading following the 1.1 percent drop in August.

On a yearly basis, approvals dropped 19.0 percent, but that beat expectations for a decline of 25.7 percent following the 21.5 percent contraction in the previous month.

The seasonally adjusted estimate of the value of total building approved fell 16.6 percent in September. The value of residential building rose 8.0 percent, while the value of non-residential building plummeted 36.6 percent.

China

China’s manufacturing sector continued to dwell in the doldrums in October, with sentiment among factory operators remaining in negative territory for the sixth month in row, the South China Morning Post reported on Thursday.

The manufacturing purchasing managers’ index (PMI), released by the National Bureau of Statistics (NBS) on Thursday, stood at 49.3 in October, down from 49.8 in September and below the expectation in a Bloomberg survey of analysts for an unchanged reading. The October figure was the lowest since hitting 49.2 in February.

The non-manufacturing PMI, a gauge of sentiment in the services and construction sectors, came in at 52.8 in October, below analysts’ expectations for a 53.6 reading. The figure was also down from September’s 53.7, dropping to its lowest level since February 2016.

Japan

The Bank of Japan maintained is policy rates on Thursday but it signaled further monetary easing going forward. The central bank said short and long-term interest rates are expected to remain at their current or lower levels as long as it is necessary to achieve its price stability target.

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