Month: April 2016

Confidence at big Japanese manufacturers worsened in the three months to March and is seen falling further ahead, a closely watched central bank survey showed on Friday.

The headline index for big manufacturers’ sentiment stood at plus 6 in March, down from plus 12 seen three months ago, the Bank of Japan’s quarterly “tankan” survey showed.

That compared with the median estimate of plus 8 in a Reuters poll of economists.

Big firms plan to cut capital expenditures by 0.9 percent in the fiscal year that started in April, compared with economists’ median estimate of a 0.7 percent decline.

The tankan’s sentiment indexes are derived by subtracting the number of respondents who say conditions are poor from those who say they are good. A positive reading means optimists outnumber pessimists.

Manufacturing activity in China unexpectedly picked up in March, an official survey showed Friday, helping ease concerns over the health of the world’s second-largest economy.

China’s official manufacturing Purchasing Managers’ Index (PMI) came in at 50.2 for March, well above a forecast of 49.3 from a Reuters poll, returning to growth for the first time since July. That compares with 49.0 in February, which was the lowest reading since 2011.

Levels below 50 signal contraction, while levels above indicate growth.

China’s official services PMI rose to 53.8 in March from 52.7 in February.

Richard Jerram, chief economist at the Bank of Singapore, said the manufacturing data growth was a surprise, while the improvement in the services data was also “quite impressive.”

“It looks to be too big an improvement to be random noise. Some of the policy easing is getting a bit of traction. That’s the most realistic interpretation,” he said.

In the wake of the data, the Australian dollar rose to $0.7682, from around $0.7664 before the release. Australia’s benchmark S&P/ASX 200index retraced some of its early losses, trading down 1.0 percent, compared with losses of as much as 1.5 percent before the release.

China is a key export market for Australia’s resources.

The data indicate that China’s economy may be regaining some steam after its recent slowdown.

China’s economic growth rate slowed to a 25-year low of 6.9 percent in 2015, as the economy continues to shift away from its manufacturing roots. To counter slowing growth, China’s policy makers have taken a slew of easing measures, including interest rate and reserve requirement ratio cuts from the central bank, the People’s Bank of China.

The slowing growth was a spur to US ratings agency Standard & Poor’s (S&P), which on Thursday cut China’s credit rating outlook from stable to negative, citing increasing economic and financial risks to the mainland government’s creditworthiness. The move is a signal that the agency may lower China’s rating from AA minus in the next six months to two years.

S&P forecast China’s economic growth would remain at or above six percent annually over the next three years – marginally below the 6.5 percent growth targeted in China’s latest five-year plan.

Moody’s Investors Service had also lowered the outlook on China’s debt rating to negative from stable earlier this month.