Europe:
Euro-Area Activity Accelerates to Fastest Pace Since Early 2011
Economic activity in the euro-area accelerated to the fastest pace in almost seven years as services surged while factories benefited from booming domestic demand and near-record growth in export orders. A composite Purchasing Managers’ Index for manufacturing and services rose to 58.1 in December from 57.5 a month earlier, beating expectations, data from IHS Markit showed. Growth momentum was the strongest in Ireland with France coming second, while activity in Germany reached its highest level in almost seven years. The report suggests the euro-zone economy is getting a strong start to 2018 after last year enjoying what was probably its best expansion in a decade. The sustained growth momentum could give the European Central Bank more evidence for removing monetary stimulus if it helps fuel an upturn in inflation. While prices eased in December, pressures should continue to build in the coming months as demand appears to be outstripping supply for many goods and services, said Chris Williamson, chief business economist at IHS Markit. “A big question for 2018 will therefore be whether relatively high unemployment and spare capacity in many countries will continue to hold down pay growth and keep a ceiling on consumer price inflation,” he said.
Asia:
China to stick with ‘around 6.5 percent’ growth goal in 2018 – sources
China will keep its target for economic growth at “around 6.5 percent” in 2018, unchanged from last year, policy sources told Reuters, as it seeks to balance efforts to reduce debt risks while keeping the world’s second-largest economy stable. The proposed target, to be unveiled at the annual parliament meeting in March, was endorsed by top leaders at the closed-door Central Economic Work Conference in Dec. 18-20, according to four sources with knowledge of the meeting outcome. Where Beijing’s policymakers set the speedometer on their closely-managed economy is always of crucial interest to global investors because of China’s role as an engine of growth for the world. Past stimulus policies to stop growth flagging as the global economy passed through a sticky few years resulted in massive borrowing by state-run firms and local governments. Total debt in the second quarter of last year amounted to 255.9 percent of Gross Domestic Product, according to Bank for International Settlements estimates. And policymakers are on a mission to reduce the risk of any crisis erupting out of the mountain of debt as the country makes its gradual transition from a command to a market economy.
U.S.:
Manufacturing in the U.S. Just Accelerated to Its Best Year Since 2004
U.S. manufacturing expanded in December at the fastest pace in three months, as gains in orders and production capped the strongest year for factories since 2004, the Institute for Supply Management said Wednesday.
Highlights of ISM Manufacturing (December)
Factory index climbed to 59.7 (est. 58.2) from 58.2 a month earlier; readings above 50 indicate expansion
Gauge of new orders advanced to 69.4, the highest in nearly 14 years, from 64
Measure of production increased to 65.8, the strongest since May 2010, from 63.9
Key Takeaways
The survey-based measure of factory activity — the year’s second-highest behind September, when storm-related supply delays boosted the index — brings the 2017 average to 57.6, the best in 13 years. The latest gain extends a string of strong readings that’s been fueled by more domestic business investment, improving global economies and steady spending by American households. A common refrain from companies surveyed, though, was difficulty finding highly-skilled labor, and some firms are paying higher wages to attract the workforce needed, ISM manufacturing survey committee chairman Timothy Fiore said on a conference call with reporters.