It was a mixed day for the US, as we saw initial jobless claims fall by a whopping 23,000 to 216,000 up to 16 February. The markets had been expecting a figure of 229,000. The Markit services PMI reading came in better than expected by rising to 56.2 in February from 54.2 the previous month. Economists had forecast a figure of 54.3, so the reading was particularly positive.
On the other hand, February’s manufacturing PMI reading dropped to 53.7 from 54.9 the previous month and below expectations of 54.7. It is the slowest growth in factory activity since September 2017. The main release was December’s durable goods orders which increased by 1.2% from a month earlier, but below the 1.5% the markets had been expecting.
Trade talks between the US and China will continue today and it will be hoped by countries around the world that a compromise can be reached. The effects of the trade war have been far-reaching and if the two largest economies in the world cannot agree what to do next, the US will impose a fresh wave of increased tariffs on Chinese goods. China will be forced to retaliate and then we will be in a whole lot of trouble.
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