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Chart of the Week: Taiwan manufacturing business surveys

Macro 3 minutes to read

Christopher Dembik

Head of Macro Analysis

Summary:  In the past few days, we got a bunch of data related to global trade that confirm global growth may surprise to the downside as a direct consequence of China’s slowdown and trade war.

Japan June preliminary Manufacturing PMI is out at minus 49.5 vs 49.8 prior, which corresponds to a three-month low. In addition, new orders are experiencing the fastest decrease since June 2016, which was a year of very low growth at the global level. Looking at other Asian countries, the trend remains widely negative and there is no sign of rebound. Latest Thai exports are contracting the most in the past three years.

In the chart below, we have plotted Taiwan’s manufacturing business surveys released by Taiwan National Development Council. Manufacturing PMI, new orders and manufacturing production have all contracted in May and based on preliminary data, contraction is expected to continue in June. What is happening in Asian export-oriented countries, that serves as proxy of global trade, tend to corroborate the need for fiscal and monetary stimulus in order to offset the negative trend that will weight on growth in coming quarters.
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Preview: A meaningless U.S. June Employment Report

Due to data volatility, misclassification and the recent rise in new COVID-19 cases conducting many States to put reopenings on hold, investors should refrain from drawing any hasty conclusions from the U.S. June Employment Report published by the Bureau of Labor Statistics today. The U-3 unemployment rate, which is the most commented, is likely to provide a truncated view of the real state of the U.S. labor market. For the time being, we prefer to refer to the U-6 unemployment rate, which better gauges labor underutilization, and the employment-to-population ratio in order to assess the evolution of U.S. employment.

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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs, or any of our other products work, and whether you can afford to take the high risk of losing your money. The value of your investments can go down as well as up. Losses can exceed deposits on some margin products. Professional clients can lose more than they deposit. All trading carries risk.

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