A ceasefire between the US and Australia’s biggest trading partner, China, is a positive in that it should keep our strong export story going. This is with a weak currency, robust demand, and supply-side constraints already acting as tailwinds, particularly for the likes of iron ore. Indeed, the Department of Industry has estimated that Australia exported $275 billion of mining and energy products in the year to June 30, breaking the previous record of $228 billion set the year before.
The department predicts that the value of mining and energy exports will rise to $285 billion in fiscal 2020. This would make the fourth consecutive year that these have set a new record. Pricing wise they are looking for iron ore to average US$80 per tonne in 2019, then US$70 per tonne in fiscal 2020 and US$58 in fiscal 2021. These numbers are roughly in line with the government’s budget estimates, but pricing in my view could remain elevated, particularly if there were another supply shock, and presuming the prospect of global recessionary conditions fades.
London factory activity in the eurozone shrank faster last month than previously thought in a broad-based downturn, according to a survey on Monday that suggested there would be no quick turnaround. The downbeat data will likely add to calls for the European Central Bank to ease monetary policy as it also highlighted weakening inflationary pressures. IHS Markit’s June final manufacturing Purchasing Managers’ Index (PMI) was 47.6, below an earlier flash reading of 47.8 and May’s 47.7, marking its fifth month below the 50 level separating growth from contraction
Britain’s economy has lost momentum and might have shrunk in the second quarter of 2019, according to data that showed the double impact of Brexit and the slowdown in the global economy.
Manufacturers had their worst month in more than six years and consumers increased their borrowing at the slowest pace since 2014. But economists said Monday’s manufacturing purchasing managers’ index showed how hard Britain’s factories were also being hit by the slowdown in the world economy caused by the trade skirmishes between the United States and China.
The overall PMI slumped to 48.0 in June from May’s 49.4, well below the average forecast in a Reuters poll of economists and its lowest reading since February 2013.