Weak UK Factory Orders

Analisi Giornaliera - 26/01/2016

Pessimism Persists for Manufacturers


Manufacturers in the United Kingdom are not optimistic regarding exports from UK factories, as the Pound Sterling gains in strength and global demand tapers off, two trends likely to stiffen the barriers against easy economic growth. A report on UK factory orders outlined the trend, shown by the Confederation of British Industry. Recent decisions by the Bank of England to keep rates at record lows, alongside official statements of rising risk for the global economy keep the outlook dim.

Russian Industrial Production Contracts

Russian Industrial Production continued to shrink annually in December, dropping even deeper to -4.50% compared to previous months -3.50%, while missing expectations of -4.20%. The Russian Statistics Service reported this to be the sharpest decline in annual production since July of 2015, with Russia’s industrial production sliding now for almost an entire year. The monthly statistic for December printed at 7.00% growth, proving an optimistic upset after having declined to -0.20% in November. The Russian economy has been hit by the continued weakness in oil prices, sanctions imposed over the crisis in Ukraine and an extremely feeble currency. Recent preliminary data regarding the country’s growth by the Statistics Service reported a decline for the year ending 2015 at -3.70%: reflecting the shrinking of its economy. In the latest sessions, the Ruble continues to lose strength over the US dollar, reaching a high price of 78.0688 upon the report’s release.


Decaying UK Factory Orders

Factory orders for the United Kingdom weakened in January as the orders suffered weak demand in the Euro Area and the effects of a strong Sterling Pound, according to the Confederation of British Industry. The orders numbers for January shed -15, following a fall of -7 in December while also missing median estimates of -10. CBI Director of Economics Rain Newton-Smith stated that despite the flat start in 2016, the deeper signs show orders and production figures are starting to stabilize. According to the 550 manufacturers surveyed, growth is expected for the first quarter of the year in domestic new orders and output whereas exports to remain flat. As emerging markets decelerate, British manufacturers worry that the lag in global recovery will continue to hold back the sector for the current year.


German Business Climate Gloom

The lowest level since almost a year ago on the Business Climate Index was reported by the German Ifo Institute for Economic Research, printing at 107.3 for the month of January. The data showed that newly pessimistic feelings within German firms made a difference to last month’s revised value of 108.6, especially in the manufacturing and construction sectors. The decline is a mirror image of the slides in the Purchasing Managers’ Index values reported by Markit last Friday. Businesses are concerned for the potential impact on them from the slowdown of the global economy and the recent plunge in Chinese markets, not to mention continuing declines in oil’s price. Further stimulus flagged by the European Central Bank President the previous week is expected to be installed as early as March, adding to concerns on where the economy of the Euro Area is headed.


Turkey’s Confidence in Manufacturing

Turkish Manufacturing Confidence for the month of January climbed to 103.3 compared to last month’s 102.2. Breaking down the Manufacturing Confidence into sectors, services and construction declined but were offset by the rise of retail trade confidence. Service confidence in January slid by 6.60% to 92.53, down from the 99.02 seen in December. Construction confidence also fell by 1.40% as January recorded the index declining to 83.91 from previous month’s 85.11. Retail trade confidence rose by 3.60% for the month of January aided by low volumes in the equity market. The Turkish Statistics Institute of the Central Bank regarded the slight increase of the general Manufacturing Confidence Index as mainly due to managers’ expectations for a pick-up in the economy as they expect a minimization in unemployment and acceleration in the employment rate.


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