Economy

BEIJING (Reuters) -China’s factory activity expanded modestly for a second straight month in November, an official survey showed, adding to a string of recent data suggesting a blitz of stimulus is finally trickling through the world’s second-largest economy just as Donald Trump ramps up his trade threats.The National Bureau of Statistics purchasing managers’ index (PMI) on Saturday rose to 50.3 – a seven-month high – from 50.1 in October, above the 50-mark separating growth from contraction and beating a median forecast of 50.2 in a Reuters poll.The mood in China’s manufacturing sector has been depressed for months due to tumbling producer prices and dwindling orders, but two months of positive PMI readings suggest the stimulus announcements are improving sentiment on factory floors.That said, fresh headwinds from additional U.S. tariffs could threaten China’s industrial sector next year and pour cold water over any early optimism in the Asian giant’s manufacturing sector.While there have been some signs that Chinese policymakers’ latest moves may be lending support to the ailing property market, which has weighed heavily on domestic demand, officials are now in a race to limit the economy’s vulnerabilities ahead of a second Trump presidency.President-elect Trump said on Monday he would impose a 10% tariff on Chinese goods so that Beijing does more to stop the trafficking of Chinese-made chemicals used in the production of fentanyl.He also threatened tariffs in excess of 60% on Chinese goods while he was on the campaign trail, hikes that pose a major growth risk for the world’s top exporter of goods.China’s exports surged more than expected in October, which analysts attributed to factories rushing out shipments to major markets in anticipation of further tariffs from the U.S. and the European Union.”The economy stabilized recently as fiscal and monetary policies eased after the Politburo meeting on September 26. But the outlook for 2025 remains unclear,” said Zhang Zhiwei, president and chief economist at Pinpoint Asset Management. “The trade war is looming and it will delay investment decisions by the corporates. The investors expect fiscal stimulus but the size and composition of spending are uncertain,” said Zhang. The central economic working conference in December may shed some light on the policy outlook, he added.The PMI report showed total new orders expanded for the first time in seven months in November, while new export orders contracted for the seventh consecutive month. INSUFFICIENT DEMAND”The PMI index continued to rise in November, indicating more obvious signs of recovery at the bottom of the economy. The effect of policies in boosting business confidence is becoming stronger,” said Zhang Liqun, an analyst at the China Logistics Information Center.However, “insufficient demand is still a major constraint on enterprise production activities,” said Zhang. “It is necessary especially to strengthen the effective driving of government public investment on enterprise orders.”The non-manufacturing PMI, which includes construction and services, fell to 50.0 this month, after it rose to 50.2 in October. Activity in the services sector expanded modestly for a second month in a row. Earlier this month, China unveiled a 10 trillion yuan ($1.38 trillion) debt package to ease municipal financing strains. That followed China’s central bank in September introducing its biggest stimulus since the pandemic to pull the economy back towards the governments growth target of around 5%.Chinese policy advisers are recommending that Beijing should maintain that same growth target next year and introduce even more stimulus to bolster domestic demand.There are early signs that the economy is turning a corner.Retail sales, a gauge of consumption, grew the most since February last month, and a slump in property sales narrowed, possibly indicating that the beleaguered sector was limping back to life.But industrial output last month slowed slightly from September’s pace and industrial profits, a lagging indicator, continued to fall, pointing to how difficult it is for firms to remain profitable in the current economic climate in China.The private sector Caixin factory survey will be released on Monday and analysts expect its reading to edge up to 50.5. China’s official November composite PMI, which includes both manufacturing and services activity, remained at 50.8 in November. More

BENGALURU (Reuters) – New Zealand home prices are forecast to rise around 5% in the next two years as lower interest rates boost demand again following a 19% correction in the market following the pandemic, according to a Reuters poll of housing experts.These same analysts said average rent increases will outpace consumer inflation, continuing to squeeze the budgets of prospective homeowners saving up for a deposit in a market where house prices doubled in just seven years to a peak in late 2021. A sharp economic slowdown and rising unemployment hit household incomes, but some optimism has returned following 125 basis points of interest rate cuts so far from the Reserve Bank of New Zealand (RBNZ), with more likely next year.Average home prices were forecast to rise 5.1% in both 2025 and 2026 after an expected 0.3% fall this year, according to the median forecast from a Nov. 12-28 survey of 10 property market analysts.The latest Reuters poll results compare to RBNZ forecasts for around 4% and nearly 7% house price growth in 2025 and 2026, respectively. House prices surged 40% during the pandemic as buyers scrambled to find properties with more living space.”For now, the housing market’s animal spirits appear to be sleeping, but anecdotes suggest buyer interest has picked up meaningfully since the RBNZ started cutting…which is perhaps a signal that there might be a ‘buy the dip’ mentality forming,” said Sharon Zollner, chief economist at ANZ.New Zealand’s economy slipped into a technical recession late last year but lower interest rates are expected to help the economy rebound next year.Slowing wage growth, however, may leave many aspiring first-time buyers with no choice but to continue renting. The average home price in New Zealand is around seven times the average household income and 10 times in Auckland, its largest city.”With falls in borrowing costs, the housing market will be more accessible for first home buyers. However, high house prices and the required level of deposits will still be a hurdle for purchasers,” said Satish Ranchhod, a senior economist at Westpac.Urban home rents were expected to rise 3.5%, according to the median estimate from a smaller sample of forecasters, outpacing expected 2.0% consumer price inflation over the next two years from a separate Reuters poll.Asked what will happen to affordability for first-time home buyers over the coming year, experts were nearly split, with four saying it would improve and three saying it would worsen.Those who said it would improve noted the market would still benefit those who already own a home or have built significant equity, a recurring theme across Reuters polls of other housing markets.(Other stories from the Q4 global Reuters housing poll) More

$1 for 4 weeksThen $75 per month. Complete digital access to quality FT journalism. Cancel anytime during your trial.What’s included Global news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print edition More

Swiss authorities are weighing up how to overhaul banking rules in a bid to prevent a repeat of the 2023 collapse of Credit Suisse, which led to its takeover by its old rival UBS.In an interview broadcast on Sunday, Keller-Sutter said UBS was now a very large bank in relation to the size of the Swiss economy, creating a “special situation”.”And so the appropriate protective and preventative measures must be taken; that means liquidity, that means equity capital,” she told national broadcaster SRF (NS:SRFL).She acknowledged UBS already faced certain stricter capital requirements, including under Basel III rules effective from January that not all countries are implementing identically.In April, Keller-Sutter said estimates that UBS would have to hold another $15 billion to $25 billion in capital under her government’s proposals were “plausible”.Asked in the interview whether the $25 billion figure was still valid, Keller-Sutter said she could not say. In the end, what counted was the whole package of measures, she noted.”This must be looked at in a proportionate, targeted way,” she said, arguing Switzerland must find a compromise between having a competitive financial sector and protecting taxpayers.Addressing an upcoming parliamentary report into how authorities handled the Credit Suisse crisis, Keller-Sutter stressed that the main blame lay with the bank’s management.Asked about the risk of incoming U.S. President Donald Trump imposing hefty trade tariffs on other countries, Keller-Sutter said it was too early to speculate.”But of course if such tariffs did come about, it would be poison for world trade,” she said. More

NEW YORK (Reuters) -The coming week will give investors a fresh view into the health of the U.S. economy with the release of a closely watched employment report that could help determine the trajectory of interest rates in the months ahead. Stocks are heading into December with the benchmark S&P 500 near record highs following an over 25% year-to-date gain. Part of that performance has been fueled by expectations that the Federal Reserve will continue cutting interest rates into next year, after reducing borrowing costs by 75 basis points in 2024. But uncertainty over the Fed’s rate trajectory has increased in recent months as a spate of robust economic data – including a blowout jobs report for September – stirs concerns that inflation could rebound if the central bank lowers rates too far, undoing two years of progress in tamping down prices. While investors have largely welcomed evidence of economic strength, another round of strong jobs data on Dec. 6 could further erode expectations for Fed cuts and fuel wariness over inflation, investors said.The jobs data “is going to provide a more clear picture of the underlying trend, which is important as there’s a lot of debate and uncertainty around the path for interest rates by the Fed,” said Angelo Kourkafas, senior investment strategist at Edward Jones. Wall Street has already tempered expectations for cuts over the coming year. Fed funds futures show investors betting the rate will fall to 3.8% by the end of next year, from its current 4.5% to 4.75% range. That is more than 100 points higher than what they had priced in September.  Fed Chair Jerome Powell said earlier this month that the central bank does not need to rush to lower rates, citing a solid job market and inflation that remains above its 2% target.The Fed is “starting to question out loud how much more easing the economy, especially the labor market, really needs,” said Sameer Samana, senior global market strategist at Wells Fargo (NYSE:WFC) Investment Institute.Futures late on Wednesday were pricing a roughly 70% chance that the central bank will cut rates by 25 basis points at its Dec 17-18 meeting, according to CME Fedwatch. Economists polled by Reuters expect payrolls to have climbed by 183,000 jobs in November, and a report that far exceeds those forecasts could shake confidence in a December move and bruise stocks, said Anthony Saglimbene, chief market strategist at Ameriprise Financial (NYSE:AMP).  “There might be a little bit of a sell off here if you see the jobs report come in stronger than expected,” he said. Equities have gotten a boost from the view that President-elect Donald Trump’s policies such as tax cuts and deregulation could spur growth despite their inflationary potential.Stocks in recent days largely shrugged off Trump’s pledge to impose big tariffs on Canada, Mexico and China, America’s three largest trading partners. More optimism was reflected in the Conference Board’s survey released on Tuesday, which showed a record 56.4% of consumers expect stock prices to increase over the next year.Meanwhile, the S&P 500 is trading at more than 22 times earnings estimates for the next 12 months, its highest P/E valuation in more than three years, according to LSEG Datastream. To strategists at Yardeni Research, the mounting optimism could be a worrisome signal.”A more immediate risk to the stock market rally than tariffs is that investors are getting too bullish,” Yardeni Research said in a note on Thursday. “From a contrarian perspective, this suggests that a pullback is likely.”text_section_type=”notes” >Wall St Week Ahead runs every Friday.  For the daily stock market report, please click [.N]   More

Le Pen has given Barnier until Monday to yield to budget demands from the National Rally (RN) or face the threat that they would back a likely no confidence motion against his government, which would trigger its collapse.”A vote against (the government) is not inevitable. All Barnier has to do is accept to negotiate,” Le Pen said in an interview with La Tribune newspaper.”There’s been talks for the last two weeks but clearly things haven’t moved ahead as we would have liked,” she added.Barnier already dropped a planned electricity tax increase last week, but the RN also wants him to raise pensions in line with inflation whereas he had aimed to raise some less than inflation to save money. The RN is also unhappy the government may raise tax on gas and wants a cut in France’s contribution to the European Union’s budget among other demands.The standoff could come to a head as early as Monday if Barnier has to use aggressive constitutional powers to force a social security financing bill through, which would inevitably trigger a no-confidence motion from the left.To survive the vote in the fractured lower house, Barnier needs the RN to abstain, otherwise his government and the budget bill could fall, plunging France deep into a political crisis.Finance Minister Antoine Armand warned in le Journal du Dimanche weekend newspaper that would mean special emergency legislation would have to be passed to ensure that there would be a budget at the start of the year.But it could only roll over spending limits and tax provisions from this year, which means pensions would get squeezed and tax thresholds would rise for 17 million people as neither could be adjusted for inflation.The growing uncertainty over France’s budget and the future of its government has put French debt and stocks under pressure, pushing the risk premium on the government’s bonds to a more than 12-year high last week.Standard & Poor’s offered some relief on Friday, leaving its AA- rating on French debt unchanged although it raised doubts about whether France could stick to the government’s deficit-reduction targets. More

$1 for 4 weeksThen $75 per month. Complete digital access to quality FT journalism. Cancel anytime during your trial.What’s included Global news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print edition More

$75 per monthComplete digital access to quality FT journalism with expert analysis from industry leaders. Pay a year upfront and save 20%.What’s included Global news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print edition More