Construction growth slows as Brexit delays building projects

Sharp reductions in production and new business pushed the Malaysian manufacturing headline index deeper into negative territory in December

Construction growth slows as Brexit delays building projects

As expected, after the official PMI already contracted last week, today the privately measured Caixin China General Manufacturing PMI started 2019 dipping down to 49.7 or just a fraction below 50 that marks the border line between expansion and contraction.

"Stocks of purchases and finished goods both rose at near survey-record rates, while stockpiling by customers at home and overseas took new orders growth to a ten-month high". New export business also rose at a solid pace.

Additionally, panellists stated they had experienced improved export demand from the United Kingdom and the Middle East. Manufacturers responded to the increase in new orders by raising production in December.

December's modest rate of expansion was the slowest seen since September 2018. December's decrease was the 3rd in as many months and the steepest since November 2014. Uncertainties regarding Brexit disruption on supply chains and the exchange rate are also weighing on business confidence.

"That showed external demand remained subdued due to the trade frictions between China and the U.S., while domestic demand weakened more notably", according to Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group, a subsidiary of Caixin.

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However, despite December's increase in manufacturing activity, the average PMI reading in the fourth quarter of 2018 was the weakest since the third quarter of 2016, which was the first quarterly survey to be carried out in the immediate aftermath of the vote to leave the EU.

Another relatively weak rise in business and consumer spending contributed to a lack of new work to replace completed projects in December.

Factory gate price inflation slowed for the second month running and reached its lowest point since March, according to the seasonally adjusted Output Prices Index.

Today, the United States jobs report is projected to show 180,000 net hires in December, the lowest median projection ahead of the report in nearly a year.

Manufacturers noted that greater concern about the domestic economic outlook had weighed on their growth projections for 2019.

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