The markets were marking time earlier this week, as the two leading economies were both facing possible changes in leadership. Although most financiers assumed that US president Barack Obama would get re-elected, few were taking exposed positions. Stability is prized by the Chinese, but expected incoming president Xi Jinping and the expected prime minister Li Keqiang could herald changes.
4.8% - rise in new orders for manufactured goods in the US in September
Political uncertainty apart, China’s official purchasing managers’ index (PMI) for manufacturing, compiled by the China Federation of Logistics and Purchasing, rose to 50.2% in October from 49.8% in September. The other manufacturing PMI index, compiled by the bank HSBC in collaboration with Markit Economics, which places greater emphasis on small companies, also moved in the right direction - to 49.5 in October from 47.9 in September - even if it did not cross the 50 threshold that is intended to correspond to expansion.
US indicators were also moving in the right direction. The PMI for manufacturing, prepared by the Institute for Supply Management, rose to 51.7% in October from 51.5% in September. And new orders for manufactured goods rose by 4.8% in September, after declining by 5.1% in August, according to the Census Bureau.
The US economy also created more jobs than expected in October at 171,000, exceeding the 125,000 forecast by economists. Unemployment remained “essentially unchanged” at 7.9% of the workforce, added the Bureau of Labor Statistics.
Early estimates of the damage caused by ‘super storm’ Sandy varied from $10bn to $30bn (£6bn to £19bn), and it was also suggested that US GDP would be down by 0.5% in the fourth quarter of this year. Against that, reconstruction funded by the Government and insurance companies will add to economic activity in the first half of next year.
But the downturn in the eurozone was gathering momentum. The manufacturing PMI, compiled by Markit, dipped to 45.4 for October from 46.1 in September, and compared with a preliminary figure of 45.3 for October. The composite output index for the eurozone fell to 45.7 in October from 46.1 in September, the ninth consecutive decline.
The manufacturing PMI for Japan, compiled by Markit and the Japan Materials Management Association, was at an 18-month low of 46.9 for October, down from 48.0 in September.