The Day at a Glance | September 30 2021

The Top

*The manufacturing sector in China contracted during September.

*The Central Bank of Mexico will carry out a monetary policy decision this afternoon (4.75%e.).

*US Senate will vote on funding the government until December 3rd; it has Democratic support in order to avoid a shutdown tomorrow.

*Inflation increases to its highest level in a decade in France (2.7% annual Sep.), Spain (4%) and Italy (3%); Germany (4%) records its highest level of inflation in three decades.

*China calls on the banking sector to back credit for the real estate sector and home buyers in the country.

*Jobless claims in the US surprisingly increased for a third consecutive week.

*The dollar (DXY) reached its highest level in the last year.

Economic environment

Low growth in China. Economic growth in China remains weak through a series of persistent risks that threaten to keep the world`s second largest economy in a low-growth trend. The economy`s PMI`s in September showed an overall recovery in activity after a contraction was logged in August. The services sector rebounded strongly after disappointing figures were recorded last month (53.2 vs 47.5 prev.), and the larger part of the economy once again expanded in September (Composite PMI 51.7). However, the manufacturing sector (49.8) contracted during the month for the first time since the pandemic began, which was a result of disruptions in the supply of energy in the country. Close to 21 Chinese provinces have faced cuts in the supply of electricity in recent weeks in light of scarcity of carbon to generate it – along with efforts to reach certain target levels of greenhouse gas emissions; cuts in supply could continue in the future. Apart from this, there are measures to stop the over-indebtedness in the real estate sector, which points towards a greater slowdown in the country`s rate of growth. Consumption has remained weak since the end of the pandemic and doesn’t seem to represent a strong alternative for growth in light of the industrial sector`s deceleration, which is why growth estimates have started being revised downwards under 8% for 2021.