The November print of the UK S&P Global/CIPS composite PMI surprised on the upside, with the index rising to 50.1 from 48.7 in October. There were improvements in both the manufacturing and services sub-components, although the manufacturing index remained below the neutral-50 line with a value of 46.7 (from 44.8), while the services index rose to 50.5 (from 49.5). The survey also highlighted a rise in cost pressures, with respondents citing wages and fuel rises as the primary factors.
The Eurozone HCOB composite PMI remained firmly in contractionary territory but did rise slightly more than had been expected. The headline index rose to a value of 47.1 in November from 46.5 in October. There were increases in both the manufacturing and services sub-components, although they also remained below the neutral-50 mark. There was additionally some evidence of a cooler labour market, with the employment index falling below 50 for the first time in 3 years. Underlying the aggregate Eurozone movement, was a small decline in the French composite index to 44.5 in November from 44.6, which was more than offset by an unexpected rise in the German composite PMI value to 47.1 from 45.9 in October.
The Turkish central bank hiked its one-week repo rate by 500bps yesterday, greater than the consensus prediction of 250bps, taking the benchmark rate to 40.00%. This marked the sixth outsize move in a row since Hafize Gaye Erkan took over as governor in June, with a cumulative 2,650 bps of hikes over the period. The bank’s communique explicitly stated that the hiking cycle is set to slow and is likely near its end as it noted that inflation was starting to show signs of moderating, and that ‘the current level of monetary tightness is significantly close to the level required to establish the disinflation course.’ Nevertheless, with annual CPI inflation still at 61.4% in October, a rate cut likely remains some way off given the bank’s ongoing commitment to ‘ensure a decline in the underlying trend of inflation and to reach the 5 percent inflation target in the medium term.’
Japanese CPI, excluding food prices, rose 2.9% y/y in October from 2.8% the month prior. The measure has now been above the BoJ’s 2% target for 19 months. Price pressure was supported by a reduction in energy subsidies and higher hotel prices.
Today’s Economic Data and Events
13:00 GE IFO business climate, November: forecast 87.5
18:45 US S&P Global US composite PMI, November: forecast 50.4
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