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Mnuchin: hope to advance the trade war
According to today's data, French and Chinese manufacturers will soon hope for a breakthrough in the trade war.
US officials have landed in Beijing today for further talks to end the dispute that has resulted in tariffs on hundreds of billions of dollars worth of export.
Speaking to reporters at his hotel, US Treasury Secretary Steven Mnuchin said he hoped to make progress:
"We look forward to productive discussions over the next few days."
The production line of a plant of motor vehicle manufacturer Power Xinchen in Mianyang, Sichuan Province. Photo: China Stringer Network / Reuters
Overnight, some disappointing data from the Chinese manufacturing sector has undermined hopes for recovery in the global economy.
According to the country's National Bureau of Statistics, Chinese factories barely rose in April. It is the official manufacturing PMI, which tracks activity, which went from 50.5 in March to 50.1 in April. This level indicates stagnation, implying that the trade war with the United States continues to rage.
These trade disputes are certainly also a factor in the erosion of French export growth in the last quarter.
the Belgian dentist
(@Belgiandentists)According to the SMIs of April, China's rebound was short-lived (manuf in white, not manuf in blue). The details show a deterioration of virtually all components (export orders are a notable exception). pic.twitter.com/pX69cbjhvM
Update
While any growth is welcome, a quarterly growth rate of 0.3% is rather weak.
And like Philippe Waechter, chief economist at Ostrum Asset Management points out that French GDP has now been under control for more than a year.
Philippe Waechter
(@Phil_waechter)French #GDP The quarterly change was 0.3% in the first quarter, slightly lower than in the previous two quarters. The trend of growth in France is close to 1.2%. Domestic demand (0.3 vs. 0.2 in 4Q18) was up, stocks (0.3 to -0.1) were stronger but net exports were negative (-0.3 to 0.3) pic.twitter.com/zhLkLlomi6
Update
This chart shows how stopping the growth of French exports has retarded its economy during the last quarter (green bar).
Photography: INSEE
The red bar is also important – companies inflate their stocks.
More encouragingly, spending by French households increased by 0.4% in the last quarter (after stagnating in October-December). This suggests that consumer confidence could resume.
French companies also continued to invest in new equipment and facilities – this "gross fixed capital formation" increased by 0.3% (down slightly from the previous quarter).
This means that domestic demand has boosted the French economy.
Decline in net trade hurts France
According to France's report on GDP, it is clear that the slowdown in world trade has hurt companies.
Export growth virtually ceased in the first three months of 2019, rising only 0.1% (following 2.2% growth in the fourth quarter of 2018). Imports also slowed from 1.2% in Q4 2018 to 0.9%.
The drop in exports means that net trade has lost 0.3% of France's growth rate.
Companies also increased their inventories, suggesting that they stocked products rather than selling them in the markets. This accumulation of stocks added 0.3 percentage points to France's growth rate, which means that total growth would have been stable otherwise.
France rose 0.3% in the last quarter
A protester, Yellow Vest or 'Yellow Vest', waved a French flag last weekend. Photography: Kiran Ridley / Getty Images
Newsflash: France launched the GDP day by recording another quarter of growth.
The French economy grew by 0.3% in January-March this year, new figures from the statistics body INSEE show.
This corresponds to its growth rate recorded in the last quarter of 2018, and suggests that the protests of the Yellow Vests that have recently seized Paris have not slowed down the economy.
More soon….
Update
Introduction: Eurozone GDP Day
Hello and welcome to our slippery coverage of the global economy, financial markets, the eurozone and businesses.
Today, we are learning if the European economy is stuck in the rut, when the new GDP figures for the single currency region will be released.
Economists predict that growth in the euro area will reach 0.3% in the first quarter of 2019, after 0.2% in October-December. It would be a marginal improvement, but still rather weak.
At the country level, Italy may well emerge from the recession.
The new unemployment figures in the euro area will also show us that businesses continue to create jobs, despite the slowdown.
In a record day for data, we should also get growth figures from Mexico and Canada.
On the business front, Santander, Lufthansa and Airbus report results this morning, with BP and Whitbread in the UK (plus GM, Apple and McDonalds later in the day).
. In addition, the technology sector could be controlled after the publication of disappointing results by Alphabet.
Markets should be calm after a new record on Wall Street last night, but some surprise data on GDP today could change that!
IGSquawk
(@IGSquawk)European calls for opening:#FTSE 7449 + 0.11%#DAX 12317 -0.09%#CAC 5577 -0.08%#MIB 21769 -0.09%#IBEX 9512 -0.06%
L & # 39; s calendar
- TSB 6:30 am: French GDP for the first quarter of 2019
- TSB: Spanish GDP for the first quarter of 2019
- 8:45: HST: German unemployment figures for April
- TSB 10h: Eurozone GDP for the first quarter of 2019
- 11h BST: Italian GDP for the first quarter of 2019
- 13:30 BST: Canadian GDP for February
- 14:00 BST: Mexican GDP for the first quarter of 2019
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