Global Trends in Business January 2014

The HSBC Preliminary China Manufacturing PMI has declined to a six-month low of 49.6 in January,down from 50.5 in December.A reading below 50 indicates contraction in the sector.The nationwide survey of purchasing managers by HSBC Holdings PLC precedes the final reading by a month and covers 85-90% of survey respondents.
HSBC economist Qu Hongbin attributed the drop to a falloff in domestic consumption.Almost all subgroups in the survey fell,from new orders,to new export orders and employment.As inflation is not a problem,the policy focus should be on supporting growth,Mr.Qu advised.*
At the same time,ECB President Mario Draghi expressed guarded optimism about the prospects for Euro-zone economic recovery,speaking to the Swiss German language daily Neue Zurcher Zeitung.I am very careful about making projections that are overly optimistic,Mr.Draghi cautioned,but yes,the economy in the currency area is growing again,although it's not yet broadly based and the jobless rate above 12% is very high.The growth isn't just driven by exports anymore,but increasingly by domestic demand as well.On the other hand,the hard economic data are still inconsistent,the ECB leader noted.*
Multinational consumer products titan Unilever found its European business to be flat,with Southern Europe stabilising.China and Indonesia sales were growing,while South America saw double digit sales growth.North America showed lower sales volume,but the personal care business improved.
Underlying Q4 sales growth was 4.1%,and emerging markets sales growth was 8.4%.CEO Paul Polman cited consistent underlying sales growth and margin expansion,coupled with strong cash flow.*
Unilever NV(UN)

Chinese Service Sector Expresses Confidence

According to the China March HSBC Services PMI,or Purchasing Managers Index,business confidence hit an 11-month high.The survey registered a 53.3,which is slightly less than February's 53.9 reading;but a mark of greater than 50 still indicates growth in service-oriented businesses.New business expanded for the fortieth straight month.
Compiled by British financial data expert Markit for HSBC bank,the index showed firmer client demand;improved overall business conditions;and service firms being able to pass rising costs onto consumers.
Qu Hangbin,HSBC Chief China Economist,nonetheless thinks overall growth is slowing a bit-for instance,in export orders;industrial production;or employment.All these call for further easing measures,while inflationary pressures should remain relatively contained in the coming months.
Caution with regard to the March report is justified in that service sector growth was offset by manufacturing weakness and affected by state policies to cool growth in the real estate market.Indeed,service sector companies raised their staffing at only a fractional rate in March;and outstanding business,or backlogs,also rose marginally.
As well,despite the 11-month high in business confidence,the degree of optimism was weaker than the long-run trend for the survey.
All the same,survey respondents were expressing optimism,saying they would expand their companies and expected growth in the wider Chinese economy.China's official growth estimate for 2012 is 7.5%,an outstanding rate in comparison to the developed nations.
HSBC Holdings PLC(HBC)

Asian Assets Sought

A number of banks have expressed interest in Asian assets of Royal Bank of Scotland Group.Among those interested are Standard Chartered,HSBC Holdings and Australia&New Zealand Banking Group,or ANZ.RBS is divesting commercial and retail units in eight Asian locales,such as Hong Kong,China and India.RBS has been in talks with the prospective buyers.ANZ has gone as far as to sell shares in order to raise capital to fund such purchases,among other purposes.In better times,the RBS assets might well go for a less attractive price than today.