Strong job creation in March in the US has brought relief after the disappointing data the month before. The Chinese manufacturing indices have rebounded and crossed the 50 level. In the eurozone, the pressure on the manufacturing sector continues but the services PMI has improved. Retail sales have beaten expectations. For the manufacturing sector, a lot will depend on how uncertainty evolves. In this respect there are hopeful signs. The likelihood that an agreement will be reached between the US and China has increased whereas in the UK, cross-party negotiations seek to avoid a hard Brexit.
One swallow does not make a summer but, continuing the metaphor, the recent news flow shows that the swallows are becoming more numerous. In the US, 196.000 jobs were added in March, a number which was well above consensus expectations. After last week’s improvement in surveys for Germany (IFO except for manufacturing) and France (INSEE), this week’s increase in the Chinese official manufacturing PMI (from 49.2 to 50.5) and the second consecutive increase in the Caixin manufacturing PMI (from 49.9 to 50.8) was greeted with relief. It suggests that stimulus measures are starting to have some impact and raises hope with Chinese trading partners that the export outlook will improve. For the time being, it is more about hope than hard data.
