Metal prices rose this week with the help of some positive indicators, but the obstinately partisan failure of the US Congress to make progress towards avoiding the ‘fiscal cliff’ held the markets back.
The US’s real GDP rose at an annual rate of 2.7% during the third quarter, according to the Commerce Department. Also pointing to the upside was the official purchasing managers’ index (PMI) for manufacturing in China, which came in at 50.6 for November. This was less good than the expectations of 50.8, but it was both the highest level for seven months and up from October’s level of 50.2.
Furthermore, the PMI for Chinese manufacturing compiled for the bank HSBC, which focuses more on small enterprises than the official index, rose to 50.5 in November. This was up from 49.5 in October, and showed the first improvement in operating conditions for 13 months
But not everything was going as well. The PMI compiled for US manufacturing by the Institute for Supply Management fell to 49.5 in November from 51.7 in October, pointing to contraction in the sector. But the institute noted that the country’s overall economy was in still growing, albeit more slowly than before, and was in its 42nd consecutive month of growth.
Manufacturing in the eurozone continued to decline. The relevant PMI compiled by Markit Economics came in at 46.2 for November, the same as the earlier provisional figure. While up from 45.4 in October, and therefore declining more slowly, this was the 16th dip in a row. Much the same was true of Germany, where the manufacturing PMI edged up to 46.8 for November from 46.0 in October.
Meanwhile the euro crisis rumbled on. Greece has started bidding to buy back some e10bn (£8.1bn) of its bonds from private investors, and is prepared to pay 32-40% of their face value. Spain has asked for e39.5bn from the European Central Bank to recapitalise its banks, but the government has so far avoided asking for a full bailout.
Japan produced a nice surprise, however, as industrial production rose by 1.8% in October. The indicator had been expected to fall by around 2%, after having fallen by 4.1% in September.