U.K. Manufacturing Orders Stay at Strongest Level Since 1988
U.K. factories enjoyed another month of strong demand in December, with orders staying at their highest level in almost three decades. The Confederation of British Industry said its monthly factory index was at 17 for a second month, matching the highest level since August 1988. The measure for export orders slowed to 16, from 20 in November, but remained far above its long-run average. U.K. factories are benefiting from the twin effects of a Brexit-driven weaker pound and a resurgence in global trade. The CBI said 14 of 17 sub sectors reported higher-than-usual orders in December, and demand was particularly strong for motor vehicles and transport equipment, and mechanical engineering. The CBI survey chimes with a separate report from accountancy firm BDO LLP, which said U.K. export growth rose in the fourth quarter, outperforming its European peers in part because of sterling. On a trade-weighted basis, the pound is 11 percent below its level before the Brexit referendum in 2016. The export performance is in contrast to the domestic economy, where the currency’s depreciation has pushed up import costs and inflation. That’s hit consumers, who’ve reined in spending this year.
China’s top leaders start annual economic meeting
China’s top leaders have started an annual meeting to map out economic and reform plans for 2018, the official Xinhua news agency reported on Monday. The closed-door Central Economic Work Conference is keenly watched by investors for clues on policy priorities and key economic targets for the year ahead. The meeting will focus on implementing agendas laid out by a key Communist Party Congress in October, Xinhua said without giving further details. At a Politburo meeting earlier this month, top leaders pledged to deepen structural reforms and curb risks while maintaining steady economic growth in 2018. Key economic targets for 2018 are likely to be set during the top-level meeting, but are not expected to be announced until the annual parliament meeting in March. Policy sources have told Reuters that China’s leaders are likely to maintain this year’s growth target of “around 6.5 percent” in 2018, even as they ratchet up efforts to control systemic risks from a rapid build-up of debt in the world’s second-largest economy. Xinhua said the meeting began on Monday, but it did not say when the conference would end.
U.S. tax cut outlook drives stocks but dents dollar
Global stock markets hit record highs on Monday on expectations that a U.S. tax bill could soon pass, though a more cautious reading of the draft law’s prospects among currency traders put the dollar under pressure. Top U.S. Republicans said on Sunday they expected Congress to pass the tax code overhaul this week. Global stock markets have surged this year, in part on expectations of the reform, which is seen boosting corporate profits and triggering share buybacks and higher dividend payouts. The benchmark MSCI World index, which tracks shares in 47 countries, rose 0.41 percent on Monday to hit a record high, putting it on course for its best year since 2009. The pan-European Stoxx 600 index was up 0.9 percent, less than 2 percent off a two-year high hit at the start of November. Germany’s DAX index rose 1.2 percent, with the U.K.’s FTSE 100 .FTSE up 0.5 percent.