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Lookout For Manufacturing Data This Week!
Forward, Tradeable | 31 March 2014
By: Nicholas Tan
Articles (71) Profile
By: Raymond Leung
Articles (142) Profile

The FTSE Straits Times Index (STI) marginally rose 9.71 points to close Friday’s trading session at 3,172.17 as Chinese Premier Li Keqiang expressed that China has policies in reserve to deal with economic volatility this year and it cannot ignore difficulties and risks from a slowdown in the economy.

In the US, positive consumer spending data was seen as consumer spending rose 0.6 percent in February, at the fastest rate since November as Americans spent more on healthcare and utilities. Separately, consumer sentiment declined to a final March reading of 80 from 81.6 in February.

For this week, investors will likely focus on Fed Chair Janet Yellen’s speech in Chicago today, as well as payrolls data due Friday, for clues on the US interest rate outlook.

In Singapore…
• Mar Purchasing Managers’ Index
• 1Q14 GDP Y/Y – Advance

March’s Purchasing Managers’ Index (PMI) will be released this week. Market watchers remain hopeful for the index as other economic figures released previously were largely positive. For the month of February, the PMI rose 50.9 with production output hitting its four-month high as key economies continue to pick up.

There will also be a sneak peek into the 1Q14 gross domestic product (GDP) result as the advance figure is released. Computing all major economic figures that were released this quarter, we should be looking at a modest growth in GDP.

In US…
• Mar Markit PMI – Manufacturing
• Mar Markit PMI – Services
• Mar Nonfarm Payrolls

Markit will be releasing both the Manufacturing and Services PMI for the month of March in the same week. The release of these two data will give us the rough estimate for the PMI Composite figure.

Flash figures that were released earlier this month showed a slower expansion in the manufacturing sector as the Manufacturing flash PMI slipped to 55.5 from February’s 57.1 (above 50 indicates expansion). However, the Service sector is starting to shake off the winter freeze as its flash figure picks up. After falling to a four-month low in February of 53.3, the Service flash PMI grew to 55.5 beating the market’s forecast of 53.2.

Using the stronger than expected Service PMI as a support to the lower manufacturing data, the composite PMI is expected to continue its growth in March.
In the month of February, the US Nonfarm Payrolls remained weak for a third consecutive month as the cold winter continues to drag the economy. March’s Nonfarm Payrolls will be released this week and market watchers are hoping that the figure will turnaround as the weather warms up.

Earlier this month, Janet Yellen reiterated her confidence in the recovery of the US economy and the job market at the Federal Open Market Committee meeting. More jobs are expected in the market as the manufacturing sector continues to expand while the service sector starts to pick up after the cold winter ends.

Meanwhile In Europe…
• Mar Markit PMI – Manufacturing
• Feb Unemployment Rate
• Mar Markit PMI – Composite

Markit will announce their Composite PMI after the Manufacturing PMI this week. The Manufacturing PMI is expected to stay in expansion levels as the French data picks up while the German’s expansion slows down. It is likely for the Composite PMI to continue expanding at a sluggish rate as recovery in the manufacturing and service sector continues to be slow.

Unemployment rate is not expected to improve tremendously following a high unemployment rate of 12 percent in January. According to the latest figure, inflation in the Eurozone is at a low of 0.8 percent. Looking at the sluggish recovery, low inflation and high unemployment rate, economists are hoping for the European Central Bank to introduce monetary policies to spike a stronger recovery.

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This is a co-written article of Shares Investment, which lays out the analytical ideas and thoughts of the authors, who are well versed in investments and market concepts.

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