Summary:
1- The pace of industrial activity decline in Japan is accelerating with decreasing demand.
2- Investors are pulling their funds ahead of the U.S. elections.
3- Economic growth in Canada for the third quarter may be below expectations.
The pace of decline in factory activity in Japan is accelerating as demand weakens.
The Japanese manufacturing Purchasing Managers' Index (PMI) fell to 49.2 in October from 49.7 in September, remaining below the 50.0 threshold that separates growth from contraction for the fourth consecutive month. The decline in both domestic and global demand, particularly in the semiconductor and automotive sectors, has led to a slowdown in sales and production. Due to weak new orders and excess inventory, the sub-index for production continued to decline, reaching its lowest level since April. The new orders index also dropped, remaining below the 50.0 mark for the seventeenth consecutive month, indicating further decreases in sales. Companies believe that the weakness in both domestic and international demand is the reason behind the deterioration in new orders.
Investors pull out their money ahead of the U.S. elections.
By the close on Thursday, gold had declined by 1.8% to $2,738.30, marking its largest daily drop since July 25. However, it remains the sixth highest closing price of the year. The main reason for this decline was the strong U.S. economic data, including initial unemployment claims, which eased expectations for a rate cut by the Federal Reserve. Gold prices rose by 4.15% in October, marking the fourth consecutive monthly increase. Currently, gold is influenced by various factors, making it difficult to determine whether this significant drop is a short-term fluctuation in an overall upward trend or something else, as many elements could impact the future direction of gold prices.
Economic growth in Canada in the third quarter may fall short of expectations.
Canadian GDP remained unchanged in August compared to the previous month, while it is expected to grow by 0.3% in September, indicating that the Canadian economy may not have met the growth forecasts set by the central bank for the third quarter. The 1.2% contraction in the manufacturing sector in August was the largest pressure on the economy, attributed to restructuring and maintenance activities in several automotive plants. Preliminary estimates from the Bank of Canada suggest a GDP growth of 0.3% in September, driven by gains in the finance, insurance, and retail sectors. When converting monthly GDP data to an annual growth rate, the third quarter shows a growth of 1.0%, whereas the central bank had anticipated a slowdown in growth to 1.5% from July to September before increasing in the fourth quarter. In addition to manufacturing, the transportation and warehousing sectors also influenced the economy in August. Rail transport, which declined due to strikes at Canada’s two largest railway companies, was a key factor in the reduction of the transportation sector. Overall, the goods-producing sector in Canada contracted by 0.4%, while the services sector grew by 0.1%.
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