U.S. Flash PMI: Output growth hits 26-month high in June, price pressures cool

The headline S&P Global Flash US PMI Composite Output Index edged higher from 54.5 in May to 54.6 in June, its highest since April 2022. Output has now risen continually for 17 consecutive months, with the pace of expansion having improved markedly in May and June.

June’s expansion was led by the service sector, where business activity grew at a rate not seen for 26 months. Services activity has now risen for 17 straight months, recovering strongly in the year to date after the near-stalled picture seen in late 2023, buoyed by rising demand. Inflows of new work into the service sector rose at the sharpest rate for a year in June, driven mainly by rising domestic demand. Export orders for services, which includes spending by non-residents in the US, meanwhile fell at the slowest rate seen over the past five months.

The sustained services sector upturn was accompanied by manufacturing output expanding for a fifth successive month in June, though the rate of growth of factory output slowed to the second-weakest seen over this period. While new order inflows hit a three-month high to indicate a modest firming of demand growth, the overall rise remained below than seen earlier in the year, in part due to only marginal growth of export orders.

Optimism about output in the year ahead edged up to a three-month high in June, running only marginally below the survey’s long-run average. Future prospects brightened in the service sector, reaching a five-month high and rising above the long-run average to signal relatively elevated levels of optimism. Service providers often reported improved sentiment on the back of cooling cost-of-living pressures and the anticipation of lower interest rates.

However, prospects were seen to have darkened in manufacturing, with optimism sliding to its lowest for just over one-and-a-half years and running well below the long-run average. Manufacturers’ commonly cited concerns over the demand environment in the months ahead as well as election-related uncertainty, notably relating to policy.

Employment rose for the first time in three months, reviving after declines seen in April and May to register the largest gain for nine months. Service sector payrolls rose to the greatest extent for five months, helping reverse some of the declines seen in the sector over the prior two months, and manufacturing payrolls were increased at the sharpest rate for 21 months.

Despite the rise in employment, backlogs of work rose for the first time since January. Higher backlogs were often blamed on insufficient capacity relative to demand growth, especially in the service sector. These higher backlogs were in turn often associated with labor supply difficulties, which continued to thwart hiring in some cases

Selling price inflation cooled to a five-month low in June, though continued to run above pre-pandemic ten-year averages in both manufacturing and services to point to some stubbornness of price pressures. The rate of increase nevertheless fell to a five-month low in the services sector, where the rise was among the lowest seen over the past four years, and a six-month low in manufacturing.

Input price inflation also slowed, having ticked higher in May, running below the average seen over the past year (albeit still above the pre-pandemic ten-year average) to hint at a modest cooling trend of cost growth. Rates of input cost inflation moderated in both manufacturing and services. Manufacturers commonly reported higher raw material costs related to shipping, with supplier delivery times also lengthening (albeit only marginally) for the first time in five months to hint at some supply chain pressures, while wage growth remained a major driver of higher costs in the service sector

The S&P Global Flash US Manufacturing PMI rose from 51.3 in May to 51.7 in June to signal an improvement in business conditions within the goods-producing sector for a second successive month, and for the fifth time in the past six months. Although below readings seen in February and March, the latest PMI is the third-highest recorded over the past 21 months.

New orders and employment made increasingly positive contributions to the PMI compared to May, and suppliers’ delivery times and inventories moved from being drags to providing positive support to the PMI. The positive contribution from production moderated, however, offsetting some of the gains from the other four components.

Commenting on the data, Chris Williamson, Chief Business Economist at S&P Global Market Intelligence said:

“The early PMI data signal the fastest economic expansion for over two years in June, hinting at an encouragingly robust end to the second quarter while at the same time inflation pressures have cooled.

“The PMI is running at a level broadly consistent with the economy growing at an annualized rate of just under 2.5%. The upturn is broad-based, as rising demand continues to filter through the economy. Although led by the service sector, reflecting strong domestic spending, the expansion is being supported by an ongoing recovery in manufacturing, which so far this year is enjoying its best growth spell for two years.

“The survey also brings welcome news in terms of job gains, with a renewed appetite to hire being driven by improved business optimism about the outlook.

“Selling price inflation has meanwhile cooled again after ticking higher in May, down to one of the lowest levels seen over the past four years. Historical comparisons indicate that the latest decline brings the survey’s price gauge into line with the Fed’s 2% inflation target.”

In April 2023, I wrote Economic Perspectives: Re-Acceleration! after the flash PMI reached 53.5 with “solid growth in activity seen across both the manufacturing and service sectors. (…) The rise in new business was solid overall (…).”

The Citigroup Economic Surprise Index jumped from mid-May 2023 and U.S. GDP growth accelerated from 2.1% in Q2’23 to 4.9% in Q3 and 3.4% in Q4.

To repeat S&P Global’s summary of this June 2024 flash PMI: “The upturn is broad-based, as rising demand continues to filter through the economy. Although led by the service sector, reflecting strong domestic spending, the expansion is being supported by an ongoing recovery in manufacturing, which so far this year is enjoying its best growth spell for two years.”

Employment jumped 272k in May, exceeding even the most optimistic forecast, bringing the 3-month average to May to +249k. Employment growth averaged 225k in H2’23 and 247k after 5 months in 2024. Many pundits suggest that May’s employment jump was a one-off after April’s +165k but it now seems that April was the outlier.

The flash PMI reveals that May employment showed “the largest gain for nine months” and that “service sector payrolls rose to the greatest extent for five months (…) and manufacturing payrolls were increased at the sharpest rate for 21 months.”

Services employment, 6 times larger than the rest, is actually on the way back to its longer term trend which, if reached by mid-2025, would require 275k additional monthly service jobs on average. Employment in other occupations is already well above 2019 levels.

JOLTS data show that current job openings in services are 25% above their pre-pandemic levels while non-services openings are where they were at the end of 2019. Another way to look at it: openings in services are down only 2.3% YtD vs -16.7% for all other openings.

Variant Perception shows that the largest weight components of service employment are also the fastest rising.

Governments are also contributing with well above trend expenditures and a rising share of employment since the end of 2022. Strong government spending is also felt in construction thanks to the CHIPS Act and the Inflation Reduction Act.

  

Since the pandemic, total employment rose 4.1% while the labor force (black) only grew 2.0%. As a result, the number of employed Americans, which represented 92.5% of the labor force pre-pandemic, now represents 94.5% of the labor force. The highest this ratio had ever been was in December 1999 at 93.3%. Note how the labor force has flattened since mid-2023 while employment rose 2.1 million jobs or 235k per month on average.

By that measure, the “employment slack” was 12.9 million people in December 2019, 11.2 million in April 2023 when the PMI reached 53.0 and 10.1 million in December 2023 with a PMI at 51.0. The June flash PMI reached 54.6, this when the “employment slack” dropped to 9.2 million, 29% lower than in December 2019 when the unemployment rate was 3.5%.

Watch the Citigroup Economic Surprise Index in coming months.

The unemployment rate rose to its current 4.0% level not because jobs declined, quite the contrary, but mainly because the denominator, the labor force, has stopped rising.

After jacking rates up 500 bps, the Fed can only realize that the labor market got tighter. Wages are rising 4.7% YoY (switchers at 5.2%), well above the 3% pre-pandemic range. Let’s hope productivity compensates.

Many FOMC participants are having serious doubts they have done enough:

Investors as well:

BEAR FEED

This chart showing rising unemployment claims is prime meat for economic bears.

But even though the series claims to be seasonally adjusted, other perspectives suggest to fade the recent SA uptick. Top chart from the Department of Labor, bottom from The Daily Shot:

Speaking of bears, famed investor Felix Zulauf is positively negative:

• In the US, we continue to see a bifurcated economy. The upper class who benefits from rising asset prices is well off and does not realize how the middle and lower class suffer. Those who depend on income and have no assets working for them in a bull trend are falling behind.
• We believe that the Labor Department’s recent employment number is somehow biased to the upside due to the computed birth/death statistics that are iffy if not outright wrong, while the household survey showed a stagnating employment picture. Moreover, if one used the pre-Covid seasonal adjustment factor, the jump in employment as reported disappears in total. Thus, there is some fake news element, whether intended or not.
• Several business indicators are pointing to a continued slowing US economy. The Conference Board’s expectations for business conditions as an example. Moreover, the combined index for monetary, fiscal and currency policy is restrictive and also points down. In addition, the consumer has spent the extra money received from the government during Covid and the savings rate is far below trend. Moreover, the commercial real estate problem is unresolved and some recent transactions in Manhattan with the price of a building down 67% is telling.
• Liquidity in the system will at some point begin to deteriorate and then trigger weakness in the stock market and in consumer spending among the upper class that will then join the middle and lower classes and lead the economy into recession.
• We not only disagree with the consensus view that sees China’s economy rebounding in a sustainable way but rather we believe that China is likely in recession and will slide into deeper trouble towards a major calamity that will then trigger a necessary and powerful policy response.

  A true China calamity will have implications for the rest of the world’s economies.

  First, China’s trading partners will suffer from weaker demand from China, the second largest economy and the largest economy of the world in volume terms. Moreover, China will try to escape its economic calamity by decreasing imports and increasing exports to create growing corporate cash-flow. Thus, increasing Chinese exports of all sorts of products will compete on price with the rest of the world, which will hurt corporate cash-flows in the Western world. But it could be a blessing for inflation rates. All of this will lead to an intensifying trade conflict, which is hardly beneficial for economic growth in the Western world.

  Finally, if China eases aggressively, it will weaken its currency, which will magnify the trade conflict. We expect these problems to intensify and surface over the next 6-12 months.

Economists disagree on how restrictive policies are. Goldman Sachs’ measure suggest nothing is currently restrictive. 

About these “birth/death statistics that are iffy if not outright wrong”, Ed Yardeni explains:

The B/D Adjustment attempts to account for job gains attributable to new businesses and job losses due to business closures that don’t show up in the BLS survey of employers about the number of their payroll workers. Some say the BLS is underestimating the number of business failures due to the pandemic and the sharp increase in interest rates since early 2022. So the payroll employment series is too high, as confirmed by the much weaker household employment survey.

Here’s why we (and the markets) are not as concerned as the hard-landers:

(1) Payrolls. The B/D Adjustment added roughly 1.35 million payroll jobs in the past 12 months, accounting for a significant portion of the 2.76 increase in payroll employment over the same period. In the 12 months through February 2020, just before the pandemic, BLS added about 1.1 million jobs.

(The monthly B/D series is not seasonally adjusted (nsa) before it is added to the nsa survey-based series. The sum of the two is then seasonally adjusted. Our 12-month approach solves the seasonality issue.)

(2) Business Formation. Separate data collected by the Census Bureau on business formations tracks applications for Employer IDs. The Richmond Fed concluded last August that rising business formation reflected growing entrepreneurship after the pandemic, corroborating the higher B/D Adjustment!

(3) JOLTS. If the B/D Adjustment was masking a weak labor market, would the rest of the jobs picture look so strong? Initial unemployment claims remain very low. Job openings, from the JOLTS and the NFIB surveys, both show a slowing-but-growing labor market, not one that’s been getting weaker. In our opinion, the labor market is normalizing from the pandemic. (…)

Add to that Friday’s Flash PMI score on employment.

Zulauf omits another possible blurring factor to employment stats. Jay Powell mentioned last month that the the household survey may not fully account for the recent large inflow of foreign workers into the U.S., which may be easier to capture in the establishment survey. Economists say that higher estimates of immigration help close the gap between the two series.

PMI surveys may be soft data, but they may be more dependable, at least as to trends.

EARNINGS, VALUATION WATCH

Charts FYI:

Source:  @Callum_Thomas

• If small caps are to sustainably outperform vs large caps there’s going to need to be a shift in earnings performance — and that happens to be exactly what analysts are anticipating. While in 2024 large caps are set to significantly outperform small caps on earnings, small caps are set to outperform large in 2025-26 according to analyst consensus estimates… (Callum Thomas)

Source:  Small Caps: Value Trap or Timely Add?

According to Ed Yardeni data, this is not showing up just yet:

Not apples vs apples: sector weights

FLASH PMIs

Eurozone recovery slows as new orders fall for first time in four months

The eurozone’s economic recovery suffered a setback at the end of the second quarter of the year, according to provisional PMI® survey data. New orders decreased for the first time in four months, feeding through to softer expansions in business activity and employment. Meanwhile, business confidence dipped to the lowest since February. Rates of input cost and output price inflation eased to six- and eight-month lows respectively.

The slowdown in growth of business activity seen in June was reflective of a softer expansion in the service sector and a more pronounced decrease in manufacturing production, which fell to the largest degree in the year-to-date.

Looking geographically across the euro area, Germany recorded a slight increase in activity in June, while the rest of the eurozone continued to record solid expansion, albeit with the pace of growth easing to a four-month low. Less positively, France posted a decrease in output for the second month running.

The seasonally adjusted HCOB Flash Eurozone Composite PMI Output Index, based on approximately 85% of usual survey responses and compiled by S&P Global, dropped to 50.8 in June from 52.2 in May. Although the latest reading signalled a fourth consecutive monthly increase in business activity and thus suggested that GDP will continue to expand in the second quarter, the latest rise in output was only slight and the weakest since March to signal a loss of growth momentum as the first half of the year draws to a close. Nevertheless, the average index reading over the second quarter was the highest for a year.

Growth was again limited to the service sector, where activity increased for the fifth month running. The latest rise was solid, but the softest since March. Meanwhile, the recent improving picture in the manufacturing sector was reversed in June as production decreased at a marked pace that was the sharpest since the end of 2023. Manufacturing output has now fallen in 15 consecutive months.

Central to the slower expansion in overall business activity across the euro area in June was a renewed fall in new orders, which decreased for the first time in four months. The pace of decline was only slight, however. A marked reduction in manufacturing new orders outweighed a slight increase in services new business. Demand weakness in export markets was particularly prevalent as new export orders decreased much more quickly than total new business. The decline in new business from abroad (including intra eurozone trade) was the sharpest since February amid falls across both monitored sectors.

The eurozone’s largest economy, Germany, posted a third successive monthly increase in business activity, but the rate of expansion slowed and was only marginal amid a renewed fall in new orders. France, meanwhile, saw output decrease at the quickest pace since February. The rest of the eurozone recorded a further solid rise in activity, despite the rate of growth easing to a four-month low.

In tandem with a slower expansion in business activity, the rate of job creation also eased in the euro area during June. Employment rose for the sixth month running, but at only a slight pace that was the weakest since March. Staffing levels were raised solidly in the service sector, while a similarly-sized fall was recorded in manufacturing. With new orders returning to contraction territory, output was supported by work on outstanding business. As a result, backlogs of work continued to be depleted solidly, with the latest reduction the most marked since February.

The deepening downturn in the manufacturing sector resulted in more pronounced reductions in purchasing activity and holdings of both purchases and finished goods in June. Most notably, the depletion in post-production inventories was the sharpest in almost three years. Falling demand for inputs meant for spare capacity in supply chains, and lead times on the delivery of purchased items shortened for the fifth consecutive month. The latest improvement in supplier performance was solid, but the least marked since February.

The rate of input cost inflation eased for the second month running in June and was the slowest in the year-to-date. Input prices continued to rise sharply, however, with the latest increase still slightly stronger than the pre-pandemic average. For the first time in 16 months, input costs rose across both the manufacturing and service sectors as manufacturers posted a renewed increase in their cost burdens, albeit one that was only slight. In services, the pace of input cost inflation eased to a 38-month low.

In line with the picture for input costs, the pace of output price inflation also eased in June and was at an eight-month low. Selling prices in the service sector continued to rise solidly, albeit to the least extent in just over three years. Meanwhile, manufacturers lowered their selling prices slightly. The reduction was the joint-slowest in the current 14-month sequence of falling charges, equal with that seen in May 2023. Selling prices increased at slower rates in France and the rest of the eurozone, but at a faster pace in Germany.

After having hit a 27-month high in May, business confidence waned in June amid the fall in new orders. Optimism was the lowest in four months, but still broadly in line with the series average. Sentiment dipped in both the manufacturing and service sectors, with services optimism dropping to the lowest since January.

Commenting on the flash PMI data, Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, said:

“Is the recovery in the manufacturing sector ending before it began? Both we and the market consensus anticipated that the increase in the index in May would be followed by another rise in June, potentially setting the stage for an upward trend. However, rather than moving closer to expansionary territory, the HCOB Flash Eurozone Manufacturing PMI reading fell, dashing hopes for a recovery. This setback was compounded by the fact that new orders, which typically serve as a good indicator of near-term activity, fell at a much faster rate than in May. This rapid decline in new orders suggests that a recovery may be further off than initially expected.

(…) Using the preliminary HCOB Flash Eurozone Composite Output Index in a simple regression analysis, the GDP estimate for the second quarter indicates a slight downgrade but still points to positive growth of 0.2% compared to the first quarter.

“The ECB, which cut interest rates in June, may feel vindicated by prices data which signalled easing pressure in the Eurozone’s service sector. However, the HCOB PMI do not provide ammunition for another rate cut in July by the ECB. This is because, for the biggest Eurozone economy, Germany, service providers increased their selling prices at a sharper pace than in May. In addition, in the Eurozone manufacturing sector, which experienced deflation in output charges over the last 14 months, we may see a return of selling price inflation again as input prices in the region increased in June for the first time since February 2023.

“The worsening situation in both the services and manufacturing sectors in France might be tied to the results of the recent European Parliament election and President Emmanuel Macron’s announcement of snap elections on June 30. This unexpected turn of events has likely stirred up a lot of uncertainty about future economic policies, causing many companies to hit the brakes on new investments and orders. In any case, it is evident that France’s poor economic performance has significantly contributed to the deteriorating economic conditions in the Eurozone.”

UK Purchasing Managers Report Higher Inflation and Slower Growth

Japan: Business activity expansion stalls in June

• Japan Inflation Picks Up, Adding to Hopes for Rate Hikes by BOJ Consumer prices rose 2.8% from a year earlier in May, compared with the 2.5% increase in April

• Japan’s Services Activity Shrinks First Time in Almost Two Years

New US Home Construction Plunges to Slowest Pace Since June 2020

Housing starts decreased 5.5% to a 1.28 million annualized rate last month, according to government data released Thursday. The figure was below all but one estimate in a Bloomberg survey of economists.

Building permits, which point to future construction, fell 3.8% to a 1.39 million annual rate, also the weakest since June 2020. The declines in starts and permits were broad across multifamily and single-family units. Authorized permits for single-family homes dropped for a fourth straight month to the slowest pace in a year. (…)

The number of multifamily projects already under construction dropped to the lowest since September 2022, while those of one-family units were the weakest this year.

Canada Prepares Potential Tariffs on Chinese EVs After US and EU Moves

(…) Ontario Premier Doug Ford accused China of taking advantage of low labor standards and dirty energy to make inexpensive EVs. He called on Trudeau’s government to at least match the Biden tariffs. “Unless we act fast, we risk Ontario and Canadian jobs,” he said on the social media platform X.

The value of Chinese electric vehicles imported by Canada surged to C$2.2 billion ($1.6 billion) last year, from less than C$100 million in 2022, according to data from Statistics Canada. The number of cars arriving from China at the port of Vancouver jumped more than fivefold after Tesla Inc. started shipping Model Y vehicles there from its Shanghai factory.

However, the Canadian government’s main concern isn’t Tesla, but the prospect of cheap cars made by Chinese automakers eventually flooding the market. (…)

“China has an intentional, state-directed policy of overcapacity,” Katherine Cuplinskas, Freeland’s press secretary, said in an email. “Protecting Canadian jobs, manufacturing, and our free trade relationships is essential.”

Canadian auto industry groups have called on Canada to impose stiff tariffs. They’ve warned that Canada can’t afford to be offside with the US on this issue, given the upcoming review of the United States-Mexico-Canada free trade agreement. The US and Canada have tightly integrated auto supply chains, with parts and finished vehicles flowing across the border in huge quantities. The vast majority of Canada’s auto production is exported to the US.

However, Trudeau has moved carefully, given the possibility of Chinese trade retaliation. Some environmental groups argue that it’s most important to keep EV costs low to encourage higher consumer adoption. (…)

China’s EV Makers Got $231 Billion Aid Over 15 Years, Study Says

Slightly more than half the total amount of support was in the form of sales tax exemptions, according to the research from Scott Kennedy, a China specialist at the Center for Strategic and International Studies. The rest is made up of nationally approved buyer rebates, government funding for infrastructure such as charging stations, government procurement of EVs as well as R&D support programs, he wrote in a blog post. (…)

On a per-vehicle basis, support has fallen from $13,860 in 2018 to just under $4,600 in 2023, or less than the $7,500 credit available to US buyers of qualifying vehicles under the Inflation Reduction Act, according to the post. Sales-tax exemptions were worth almost $40 billion last year, with this jumping from under $10 billion in 2020 due to the rapid increase in sales of EVs. (…)

There is much more in the CSIS post than what Bloomberg reported:

(…) These estimates reflect the combination of five kinds of support: nationally approved buyer rebates, exemption from the 10% sales tax, government funding for infrastructure (primarily charging poles), R&D programs for EV makers, and government procurement of EVs. The buyer’s rebate and sales tax exemption have accounted for the vast majority of support for the industry (see Figure 2). That said, because of the high cost and desire to winnow the field of producers, the central government reduced the buyer’s rebate in 2022 and eliminated it beginning in 2023. (…)

There are at least two different ways to interpret the data on industrial policy support for EV makers. China’s trading partners could point to 15 years of sustained regulatory and financial support for domestic producers, which has fundamentally altered the playing field to make it much harder for others to compete in China or anywhere else where Chinese EVs are sold.

By contrast, defenders of China could point out that the data show that subsidies as a percentage of total sales have declined substantially, from over 40% in the early years to only 11.5% in 2023, which reflects a pattern in line with heavier support for infant industries, then a gradual reduction as they mature. In addition, they could note that the average support per vehicle has fallen from $13,860 in 2018 to just under $4,600 in 2023, which is less than the $7,500 credit that goes to buyers of qualifying vehicles as part of the U.S.’s Inflation Reduction Act.

(…) despite the extensive government support and expansion of sales, very few Chinese EV producers and battery makers are profitable. In a well-functioning market economy, firms would more carefully gauge their investment in new capacity, and the emergence of such a sharp gap between supply and demand would likely result in industry consolidation, with some mergers and acquisitions, and other poorly performing companies leaving the market entirely.

(…) My guess, though, is that the endurance of these subsidies is unlikely part of an intentional plot for global domination of this industry and instead a byproduct of China’s inefficient industrial policy system in which support typically extends too long and is spread overly widely, a pathology visible in both tradable and non-tradable industries. (…)

BTW, China does not have a monopoly on inefficient industrial policies:

Source: @Marlin_Capital via The Daily Shot

Chinese automakers retain grip over Southeast Asia’s booming electric car market

Electric vehicle sales are surging in Southeast Asia, led by China’s BYD and Vietnam’s VinFast , eating into the internal combustion engine car market dominated by Japanese and Korean firms, Counterpoint Research said on Friday.

EV sales in the region more than doubled in the January to March quarter from a year before, according to the research firm. Sales of ICE cars, meanwhile, slid by 7%.

“As Japanese and Korean automakers, who dominate conventional vehicle sales, lag in EV adoption, Chinese OEMs (original equipment manufacturers) are stepping in to fill the gap,” said Counterpoint analyst Abhik Mukherjee.

“Over 70% of EV sales in the region are from Chinese brands, led by BYD,” he said. In the first quarter of last year, 75% of all EVs sold in Southeast Asia were made by Chinese car makers.

Thailand, Southeast Asia’s second largest economy where Chinese car makers have committed more than $1.44 billion to set up new EV production facilities, is leading the charge.

The regional auto manufacturing hub where Japan’s Toyota Motor and Honda Motor have a major presence accounted for 55% of all Southeast Asia’s EV sales in the first quarter, with the segment growing 44% compared to last year.

“Vietnam saw an even more impressive growth, with BEV (battery electric vehicle) sales increasing by more than 400%, contributing to nearly 17% of regional sales,” the research firm said.

Across the region, China’s top-selling EV maker BYD maintained pole position, cornering 47% of the regional market leader, followed by Vietnam’s VinFast.

BYD has had early success in Southeast Asia, which is still a small EV market compared to other regions, on the back of distribution partnerships with large local conglomerates.

• BYD Mexico Plant Will Create 10,000 Jobs, Executive Says

(…) A plant of that size would employ more people than facilities for some other carmakers in the country, like Audi. Volkswagen’s Puebla plant — the largest in the country — employs 6,100 assembly line workers and 5,000 supervisory employees, along with thousands of people that handle parts assembly.

The carmarker is on pace to sell 50,000 units in the country this year, Vallejo said. Last month, BYD launched its Shark hybrid truck in Mexico, just another sign of the country’s growing importance to the company.

• Nissan halts production at Changzhou plant as China woes persist

Nissan Motor has halted production at its Changzhou plant in China as it seeks to optimise its operations, the Japanese automaker said on Friday.

The Changzhou plant, jointly operated with Nissan’s local partner Dongfeng Motor was producing the Qashqai SUV with annual capacity of about 130,000 vehicles a year, a Nissan spokesperson said. (…)

The Japanese carmaker operates eight factories in China through its joint venture with Dongfeng, but like other Japanese manufacturers it has lost market share to fast-moving local rivals that are attracting drivers with an array of software-loaded electric vehicles priced at similar levels to cars powered by internal combustion engines.

Smaller rival Mitsubishi Motors decided last year to end production at its Chinese joint venture.

Huawei Mobile Devices Near a Billion as Apple Rivalry Heats Up Consumer chief says Harmony users have reached 900 million

There’re now some 900 million Huawei gadgets installed with its inhouse Harmony operating software, up significantly from just a few months ago, consumer business Chairman Richard Yu said. Sales of premium Huawei smartphones climbed 72% in the first five months of 2024, he told attendees at an annual developer forum Friday.

Those numbers illustrate the phenomenal growth Huawei’s phones have enjoyed since it unveiled the Mate 60 Pro, which contained a 7-nanometer processor that Washington officials didn’t think Chinese firms capable of developing. Business has boomed since, helping Huawei more than quintuple profit during the March quarter and take market share from Apple and Chinese rivals. (…)

That helped Harmony OS overtake Apple’s iOS in Chinese market share during the January-March period, according to Counterpoint Research. (…)

Huawei intends to release a successor to its marquee smartphone, the Mate 70, at the end of the year, Yu said. That’s likely to run on HarmonyOS Next, which will sever remaining ties to Google’s Android. (…)

It’s also making progress on the AI front with the Ascend GPU, part of a growing portfolio of chips that prompted Nvidia Corp. Chief Executive Jensen Huang to call Huawei a formidable rival.

Chinese firms including Huawei are developing local alternatives to the most powerful AI accelerators that the likes of Nvidia make, which Washington has barred from the country. That effort is considered key to Beijing’s broader ambitions of catching up with the US in AI and chipmaking.

On Friday, Yu said its Ascend processors are 1.1 times more effective in training AI models compared with mainstream offerings, though he stopped short of naming specific firms. His company has so far set up three AI data centers powered by Ascend chips in China, helping local firms develop and host artificial intelligence services.

TECHNICALS WATCH

‘Sellers Are Entering the Market’ With S&P Faltering Beyond Tech

• The momentum factor outperformance has been remarkable. (The Daily Shot)