2025-11-03 17:27

Manufacturing PMI declines to 48.7 in October New orders, exports and employment measures remain subdued Pace of increase for inputs slows, may bode well for inflation WASHINGTON, Nov 3 (Reuters) - U.S. manufacturing contracted for an eighth straight month in October as new orders remained subdued, and suppliers were taking longer to deliver materials to factories against the backdrop of tariffs on imported goods. Accounts from manufacturers in the Institute for Supply Management survey on Monday painted a dire picture of the factory sector, which ironically President Donald Trump's sweeping duties are intended to stimulate. Economists have long argued it was impossible to restore manufacturing to its former glory because of structural issues, including worker shortages. Sign up here. Some makers of computer and electronic products agreed, and noted last month that "the cost to import in many cases is still more attractive than sourcing within the U.S." The ISM added to the gloom from other advanced nations' factory surveys. "Tariffs have been roiling the sector for much of this year," said Stephen Stanley, chief U.S. economist at Santander U.S. Capital Markets. "The comments from individual respondents suggest that firms are exhausted by all of the back and forth on tariffs since the beginning of April and are suffering mightily as their customers have pulled back significantly." The ISM said its manufacturing PMI fell to 48.7 last month from 49.1 in September. A reading below 50 indicates contraction in manufacturing, which accounts for 10.1% of the economy. The PMI remained above 42.3, a level that the ISM said over time was consistent with an expansion of the overall economy. Economists polled by Reuters had forecast the PMI rising to 49.5. Six industries including primary metals, transportation equipment and fabricated metal products reported growth. Among the 12 industries that contracted were textile mills, wood and chemical products as well as electrical equipment, appliances and components, machinery, and computer and electronic products. Some makers of chemical products said business remained "difficult as customers are cancelling and reducing orders due to uncertainty in the global economic environment and regarding the ever-changing tariff landscape." Others said "wonder has turned to concern regarding how the tariff threats are affecting our business," adding that "orders are down across most divisions." Machinery manufacturers complained about tariffs, noting "the products we import are not readily manufactured in the U.S., so attempts to reshore have been unsuccessful." Others said the Trump administration's trade war had hurt agricultural exports, and impacted farmers' finances and their ability to buy new equipment. China stopped buying American soybeans amid Washington's trade war with Beijing. Last week, Treasury Secretary Scott Bessent said China had committed to purchase 12 million metric tons during the current season through January, down from 22.5 million tons in the prior season. TARIFFS ARE CONSTRAINING PRODUCTION AT FACTORIES The U.S. Supreme Court , opens new tab on Wednesday will hear arguments on the legality of Trump's import duties. Trump has defended the tariffs as necessary to protect domestic manufacturing. The ISM survey's forward-looking new orders sub-index rose to a still-depressed 49.4 last month from 48.9 in September. This measure has contracted in eight of the last nine months. "For every positive comment about new orders, there were 1.7 comments expressing concern about near-term demand, driven primarily by tariff costs and uncertainty," said Susan Spence, chair of the ISM manufacturing business survey committee. A month-long shutdown of the U.S. government is making it difficult to get a good read of the economy. The shutdown, on track to be the longest on record, has caused a government economic data blackout. Prior to the shutdown, the economy appeared to be on solid footing for much of the third quarter, spurred by consumer spending and to some extent business investment in artificial intelligence. But the shutdown could undercut consumer spending as food aid for nearly 42 million people lapsed on Saturday. Consumer spending is mostly being driven by high-income households, who are the biggest beneficiaries of a stock market rally, economists said. Backlog orders remained subdued last month as did export orders. Production was weak after briefly rebounding in September. Tariffs are gumming up supply chains, resulting in longer delivery times to factories. The ISM survey's supplier deliveries index increased to 54.2 from 52.6 in September. A reading above 50 indicates slower deliveries. Manufacturers of transportation equipment said "U.S. trade policy and reciprocal actions by China in the form of export controls on rare earths and semiconductors, as well as ocean freight carrier restrictions, have once again caused a lot of stress in supply lines." Factories continued to pay more for inputs, though the pace of price increases moderated. The survey's prices paid measure eased to a still-high 58.0 from 61.9 in the prior month. That would support some economists' views that the hit to inflation from tariffs could be a one-time boost to the price level. Factory employment remained weak, with the ISM noting that manufacturers continued to lay off workers and leave open positions unfilled to manage headcount. "There have been a lot of deals made with countries committing hundreds of billions of investment in the U.S., but these plants can take several years to get set up," said Christopher Rupkey, chief economist at FWDBONDS. "Workers will have to wait a while longer to join the assembly line, because there are no good jobs out there yet." https://www.reuters.com/world/us/us-manufacturing-contracts-further-october-supplier-delivery-times-lengthen-2025-11-03/

2025-11-03 17:09

WASHINGTON, Nov 3 (Reuters) - Google owner Alphabet (GOOGL.O) , opens new tab is tapping the U.S. dollar and euro debt markets in a multi-tranche senior unsecured notes offering. The digital media and tech giant will use the proceeds from the note sale for general corporate purposes, including the potential repayment of a portion of its outstanding debt, according to a Monday report by Moody's Ratings. Sign up here. Alphabet last took out fresh debt in April, tapping the euro debt market for 6.75 billion euros ($7.87 billion) for the first time. Tech peer Oracle (ORCL.N) , opens new tab itself sought $18 billion in new debt in September, while Meta (META.O) , opens new tab raised $30 billion in bonds last month. Demand for cloud and artificial intelligence services from Alphabet and other tech conglomerates is on the rise. "These corporations are saying they’re capacity constrained," said Emile El Nems, senior credit officer at Moody's Ratings. "Layer on top of that the potential demand that could be coming in from AI computing and you say to yourself there is something there," he added, referring to an apparent trend of tech companies tapping the debt markets. Alphabet, Oracle and Meta are also less levered than their peers, he said. Alphabet has maintained a leading market position through its array of digital services, most notably its Google search service where it has integrated its Gemini AI platform. The company also holds dominant market positions through its advertising and YouTube businesses. A representative for Alphabet did not immediately return a request for comment. ($1 = 0.8575 euros) https://www.reuters.com/business/media-telecom/google-owner-alphabet-tap-us-euro-bond-markets-2025-11-03/

2025-11-03 16:33

Goolsbee undecided on December rate cut amid high inflation Fed Chair Powell warns rate cut not guaranteed in December Goolsbee cautious due to unclear economic data from government shutdown Nov 3 (Reuters) - Federal Reserve Bank of Chicago President Austan Goolsbee said on Monday he's in no hurry to cut interest rates again with inflation still too far above the central bank's 2% target. "I'm not decided going into the December meeting" and "my threshold for cutting is a little bit higher than it was at the last two meetings," Goolsbee said in a Yahoo Finance interview. "I am nervous about the inflation side of the ledger, where you've seen inflation above the target for four and a half years, and it's trending the wrong way." Sign up here. Goolsbee was interviewed after last week's Federal Open Market Committee meeting that saw policymakers cut their interest rate target by a quarter percentage point, to between 3.75% and 4%, as officials sought to offset rising risks to the job market while still keeping interest rates in a position where they'll help lower inflation pressures. He holds a vote this year. While financial markets still expect the central bank to deliver an interest rate cut at the FOMC meeting in December, Fed Chair Jerome Powell cautioned last week that "a further reduction in the policy rate at the December meeting is not a foregone conclusion—far from it. Policy is not on a preset course." In the interview, Goolsbee acknowledged that the job market is showing some signs of weakness but that many key metrics are still pointing to stability, although there's an unwelcome lack of clarity given the government shutdown that's thwarted the release of key economic data. Goolsbee tied his preferred path for monetary policy to what happens with price pressures. "Rates can come down a fair amount," he said, noting "it would probably be most judicious to have the rates come down with inflation." The Chicago Fed leader said that his current reading on the economy was not that different from what he thought in September, when officials last offered forecasts for the economy. He cautioned against cutting rates too much given the current lack of clarity on what's happening. He flagged concerns about "front loading" rate cuts when "we have the data shutdown, we're getting some information about the job market, and we have very little private sector information about inflation. So I think we want to be wary" about lowering the cost of short-term credit. https://www.reuters.com/sustainability/boards-policy-regulation/feds-goolsbee-is-fence-about-need-cut-rates-december-2025-11-03/

2025-11-03 16:21

BRASILIA, Nov 3 (Reuters) - Brazil has established new rules raising the minimum capital required for financial institutions to operate in the country to 9.1 billion reais ($1.68 billion) from 5.2 billion reais, the Central Bank of Brazil said on Monday. Around 500 firms could be affected, with the changes potentially triggering market exits, mergers or corporate restructuring, the bank said in a statement. Sign up here. The new framework will base minimum capital and net worth requirements on the activities performed by institutions, rather than their classification. Institutions that use the term "bank" or similar expressions in their name will be subject to an additional capital buffer, it added. The rules take effect immediately, with a phased implementation through January 2028. Accounts opened by financial technology firms at traditional banks but with limited traceability of the actual fund holder must be closed if used for unauthorized financial services or to conceal third-party obligations, according to the regulation. The move aims to close loopholes that obscure final beneficiaries following police investigations under Operation Hidden Carbon, which found fintechs were used for criminal activity. It also addresses cybersecurity risks linked to technology service providers. ($1 = 5.4039 reais) https://www.reuters.com/world/americas/brazil-tightens-minimum-capital-requirement-rules-could-impact-500-firms-2025-11-03/

2025-11-03 15:51

HARARE, Nov 3 (Reuters) - Zimbabwe's annual inflation rate could halve from current levels by the end of 2025, driven by a stable local currency supported by high gold prices, according to a report by the Confederation of Zimbabwe Industries released on Monday. Annual inflation in Zimbabwe measured in the Zimbabwe Gold (ZiG) currency fell sharply to 32.7% in October from 82.7% in September, the CZI said. The organization expects inflation to decline further, potentially reaching between 15% and 20% by December 2025. Sign up here. This projection is attributed to negative month-on-month inflation in recent months and a stable ZiG currency, bolstered by surging gold prices. "The policy target is for an annual ZiG inflation of about 30%. The negative month-on-month inflation for the past two months has helped increase chances of this happening," the CZI said in its October 2025 Inflation and Currency Developments Update. The CZI, Zimbabwe's main business lobby representing manufacturing and industrial firms, publishes independent macroeconomic data that investors use as an early indicator of domestic price and currency trends. The ZiG currency, partly backed by gold, has maintained stability in official markets, with a parallel market premium of approximately 20%, analysts at Oxford Economics said. Gold production in Zimbabwe is forecast to surpass the record 38.4 tonnes achieved in 2024, driven by high bullion prices, according to the same analysts. Zimbabwe has grappled with persistent inflation and currency instability for over two decades, with frequent dollarization episodes undermining confidence in local money. A sustained reduction in inflation would be a critical step toward restoring policy credibility and facilitating economic recovery in the Southern African nation. https://www.reuters.com/world/africa/zimbabwes-inflation-set-drop-amid-stable-currency-gold-boom-2025-11-03/

2025-11-03 15:18

EBA flags 'meaningful currency mismatch' in banks' balance sheets Warning comes as banks asked to stress test dollar resilience EBA study shows EU banks subsidiaries increase dollar dependence MILAN/LONDON, Nov 3 (Reuters) - European banks increased their reliance on U.S. dollars last year, Europe's banking regulator said on Monday, amid growing concerns about the region's vulnerability should dollar financing dry up. Banks globally have significant dollar exposure in their balance sheets, making them vulnerable to potential funding shocks. Sign up here. Dollar funding fears have grown since U.S. President Trump announced a wave of trade tariffs and began putting pressure on the Federal Reserve earlier this year. That has led some European central banking and supervisory officials to question whether they can still rely on the Fed to provide dollar funding in times of market stress. The European Central Bank's Chief Economist Philip Lane said last month that euro zone banks may come under pressure if dollar funding were to dry up. The European Banking Authority said in a new report that European banks' funding in dollars including deposits represented 13.1% of their total funding in December 2024, up from 12.4% a year earlier. Banks' total exposure to assets denominated in dollars also rose to 23% from 19.3%, the EBA said. Reuters reported earlier this year that European and UK regulators have asked banks to monitor and stress test their resilience to dollar shocks. The EBA - which has a mandate to protect and support the EU financial system - also said that data indicated banks' subsidiaries are increasing their reliance on U.S. dollar funding at a faster pace than their parent entities. The share of dollar funding increased the most during 2024 for securities financing transactions and unsecured wholesale funding, the EBA study shows. BANKS FACING A 'MEANINGFUL CURRENCY MISMATCH' The banking authority also warned about "a rather meaningful currency mismatch" in European banks' balance sheets, something regulators in Europe have asked lenders to monitor, Reuters has reported. The EBA added that, as of December 2024, one third of EU banks' assets were denominated in foreign currencies, compared with just one fifth of their liabilities. Earlier in October, the International Monetary Fund said supervisors and banks should effectively monitor and manage liquidity risks in significant currencies. "At the individual institution level, attention needs to be paid to any significant currency gaps in the stable funding requirements unless these are adequately hedged," the regulator added. Some EU banks have a net stable funding ratio (NSFR) - a measure of stable funding to cover a lender's long-term assets - below the 100% minimum in some foreign currencies including the dollar, the EBA said. https://www.reuters.com/sustainability/boards-policy-regulation/european-banks-increase-reliance-us-dollar-funding-eu-regulator-finds-2025-11-03/