French business activity stronger than expected in June

French business activity perked up unexpectedly in June as a stronger than expected service sector made up for a softer manufacturing sector, data compiler IHS Markit said in its preliminary composite purchasing managers index. (Reuters)
Updated 22 June 2018
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French business activity stronger than expected in June

PARIS: French business activity perked up unexpectedly in June as a stronger than expected service sector made up for a softer manufacturing sector, a survey published on Friday showed.
Data compiler IHS Markit said its preliminary composite purchasing managers index, comprising both sectors, rose in June to 55.6 from 54.2 in May.
That beat economists’ average expectations in a Reuters poll for a stable reading and brought the index further away from the 50-point line dividing an expansion in activity from a contraction.
IHS Markit economist Paul Smith said that the reading was consistent with quarterly economic growth of 0.3 percent this quarter.
“France’s economy showed noticeably divergent trends at the end of the second quarter, with the manufacturing and service sectors heading in markedly different growth directions,” Smith said.
While the dominant, more domestically focused service sector was benefitting from improved demand at home, manufacturers were seeing weaker export demand as well as growing price pressures, he said.
The service sector PMI rose to 56.4 from 54.3 in May, easily beating economists’ expectations on average for a steady reading of 54.3.
Meanwhile, in the manufacturing sector, the PMI eased back to a 16-month low 53.1 from 54.4 in May, falling short of expectations for a reading of 53.9.
The flow of manufacturers’ new orders was the weakest since February 2017 but capacity pressures kept factories busy working off backlogs of unfinished work.
Meanwhile, in the service sector, IHS Markit said panellists reported success turning firmer market demand into new contract wins.


Stronger US dollar unlikely to derail bullish view on commodities — Goldman Sachs

Updated 21 September 2018
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Stronger US dollar unlikely to derail bullish view on commodities — Goldman Sachs

  • The dollar has been lifted by a stronger-than-expected US economy, the world’s largest
  • A stronger greenback makes the purchase of dollar-denominated international commodities more expensive for holders of other currencies

BENGALURU: Goldman Sachs said a stronger dollar is unlikely to derail its bullish view on commodities, which are likely to find support from physical shortages.
The dollar has been lifted by a stronger-than-expected US economy, the world’s largest, and that’s a positive sign for global growth, the US investment bank said.
The US dollar index has lost more than 1 percent this week, but this follows months of strong demand over US-China trade-related tensions, as investors bet the greenback would gain at the expense of riskier currencies.
“The risk aversion this summer created significant emerging market destocking, particularly in China, as consumers attempted to avoid a strong dollar and tariffs by liquidating inventories,” Goldman said in a note dated on Thursday.
A stronger greenback makes the purchase of dollar-denominated international commodities more expensive for holders of other currencies, making buyers and users more likely to draw on any stored materials in preference to imports.
“This liquidation, however, has a physical limit with Chinese destocking having already created significant increases in physical (premiums) for oil and metals – a sign of physical shortages.”
Going forward, oil had a strong fundamental outlook helped by US demand growth, supply losses and disruptions, and still constrained US shale output, Goldman said.
The bank said its near-term Brent crude oil price target remained at $80 a barrel.
The bank said it was moderating its bullish view for gold due to a sell-off in emerging markets, and it lowered its 12-month price forecast for the metal to $1,325 per ounce, down from $1,450 an ounce earlier.