The metal markets traded sideways this week, uninspired by mixed data and already wondering whether business will pick up after the Chinese new year. The Year of the Snake starts on 10 February, so China will soon be on holiday.
The International Monetary Fund’s (IMF) latest forecasts cannot be considered upbeat. Global growth may reach 3.5% this year, up from 3.2% last year, and emerging markets, developing countries and the US may provide growth. But there are still significant downside risks that policymakers must address, according to the IMF.
The Chinese economy continues to show signs of improving. The preliminary purchasing managers’ index (PMI) for manufacturing, compiled for HSBC bank by Markit Economics, came in at 51.9 in January, up from 51.5 in December. It was also the index’s best showing for 24 months.
The Japanese government was forecasting growth of 2.5% for the coming financial year
New orders for manufactured durable goods in the US in December rose by $10bn (£6.3bn), or 4.6%, to $230.7bn, noted the Census Bureau. This followed a 0.7% increase in November, and was the seventh rise recorded in the past eight months.
Things were slightly less bad in the eurozone. The preliminary PMI for manufacturing, also compiled by Markit, rose to 47.5 in December from 46.1 in November. While still below 50, and therefore pointing to continuing decline in manufacturing activity, it was the least bad showing in 10 months.
The Ifo economic research institute in Munich reported that its business climate index for German industry and trade had improved for the third month in a row. The business climate also improved in the manufacturing sector, allowing the institute to conclude that optimism was returning to the sector. Markit’s preliminary manufacturing output index for Germany was up to 50.4 in January from 47.1 in December, while the PMI for manufacturing was up to 48.8 from 46.0. The former was a 10-month high and the latter an 11-month high.
The Japanese government has forecast inflation of one-fifth of 1% for the financial year starting in April, the first time it has forecast inflation for 16 years. But analysts were dubious because earlier forecasts of returning inflation - desirable in modest quantities to encourage purchases now rather than later - had proved unfounded. The government was also forecasting growth of 2.5% for the coming financial year.