Global manufacturing input cost inflation accelerates to 16-month high

The J.P.Morgan Global Manufacturing PMI – a composite index produced by J.P.Morgan and S&P Global Market Intelligence in association with ISM and IFPSM – delivered a print of 50.9 in June, down slightly from May’s high of 51.0. The PMI has remained above the neutral 50.0 mark, signalling improved operating conditions, for five months in a row.

Four out of the five PMI sub-indices were at levels consistent with expansion in June, with output, new orders and employment all rising and suppliers’ delivery times lengthening. In contrast, there was a slight decrease in stocks of purchases for the fourth month running.

The growth rate of global manufacturing production held close to May’s near two-and-a-half-year high in June. Output has now increased in each of the past six months. Upturns continued in both the consumer and intermediate goods industries, whereas production fell in the investment goods category for the second time in the past three months.

Of the 30 nations for which June PMI data were available, 18 registered an increase in output during June. Asia fared comparatively well, with ten nations seeing growth located on the continent. This included high-flyers such as India, Vietnam, and Thailand, as well as those with lesser expansion rates, such as China and Japan.

The euro area remained a weak spot, with output falling (on average) for the fifteenth consecutive month. Growth in Spain, the Netherlands and Greece was more than offset by contractions elsewhere (including Germany, France and Italy). Upturns in the US, the UK and Brazil were all sustained into June.

The latest increase in global manufacturing production was underpinned by rising intakes of new work. Incoming new business rose for the fifth month in a row, although the rate of expansion remained modest and slowed slightly since the prior survey month. The trend in international trade flows deteriorated, with the volume of new export orders falling for the first time in three months. Subdued market conditions were a principal factor underlying a dip in manufacturers’ business optimism to an eight-month low.

June saw manufacturing employment rise for the third time in four months and at the quickest pace since August 2023. The US, Japan, India and Brazil were among the larger industrial nations to register job creation. Input buying activity rose slightly, whereas stocks of both purchases and finished goods fell. Supply chain pressures remained relatively muted at the end of the second quarter. Average vendor lead times lengthened only marginally despite ongoing disruptions to global shipping caused by issues in the Red Sea and Panama Canal.

Measured overall, worldwide manufacturing input costs rose at the steepest rate for 16 months in June. These rising costs pushed up factory gate selling prices, which rose at the sharpest pace since March 2023. Rates of increase in both price measures remained stronger (on average) in developed nations compared to emerging markets.

 

Project Nexus completes blueprint to connect domestic instant payment systems

The Bank for International Settlements (BIS) and partners have announced that they have completed the comprehensive blueprint for phase three of Project Nexus, which will allow ready participants to work towards the next stage of seamlessly connecting their instant payment systems (IPS).

Phase four will see Bank Negara Malaysia, Bangko Sentral ng Pilipinas, the Monetary Authority of Singapore, the Bank of Thailand and domestic IPS operators – who worked together in phase three – joined by the Reserve Bank of India, expanding the potential user base to India’s Unified Payments Interface (UPI), the world’s largest IPS.

Bank Indonesia (BI) will continue its association with the project with special observer status. BI took part in phase three and will continue in this capacity to follow the project in the next stage of its development.

Nexus is designed to standardise the way domestic IPS connect to one another. Rather than an IPS operator building custom connections for every new country to which it connects, the operator only needs to make one connection to Nexus. This single connection would allow the IPS to reach all other countries in the network.

The conclusions and lessons of phase three of Nexus are described in a report. This is complemented by a detailed scheme rulebook and technical implementation guides, as well as ISO 20022 message specifications, which are available to central banks on request.

To facilitate live implementation, the partner central banks and IPS operators have agreed to work towards establishing a new entity, the Nexus Scheme Organisation (NSO). This entity will be responsible for managing the Nexus scheme and continuing the mission to achieve instant cross-border payments at scale.

The NSO will be wholly owned by either the central banks or IPS in participating countries, depending on the specific domestic structures. In developing the blueprint in phase three of Nexus, the BIS says it has fulfilled its role of supporting central banks in finding innovative solutions to deliver public goods and one of its key commitments as part of the G20 Roadmap for Enhancing Cross-border Payments.

 

Mashreq unveils API-enabled instant payments service for corporate clients

Mashreq has announced the launch of a new API-enabled instant payments service for its corporate and Institutional clients, integrated with Central Bank of UAE’s Aani, or Instant Payment Platform (IPP). The launch of the Instant Payment API marks Mashreq’s pilot use case, facilitating thousands of daily low-value payments for corporates in real-time via Aani. 

With this launch, Mashreq says it has become one of the first financial institutions in the UAE to successfully provide API-based real-time payment capability to its corporate and Institutional clients for domestic fund transfers, account-to-account transfers, and bulk transfers. The bank has fully integrated its corporate online banking channels with Aani or IPP platform. It aims to gradually expand its Corporate API proposition as part of its new transaction banking digital strategy. 

“The adoption of instant payments will be transformational in the Middle East,” stated Victor Penna, Head of Global Transaction Banking at Mashreq. “We expect to see huge growth in e-commerce following the implementation of instant payments, and we are delighted to play a central role in enabling such transactions for our corporate and Institutional clients. We are already seeing the power of combining instant payments with APIs, which together look set to transform the payments landscape in the UAE and across the region.”

Annual securities lending revenue down 16% in Q2

The global securities finance industry generated US$2.53bn in revenue for lenders in the second quarter of 2024, according to DataLend, the market data service of fintech EquiLend. The figure represents a 16% decrease from the US$3.00bn generated in Q2 2023.

Global broker-to-broker activity, where broker-dealers lend and borrow securities from each other, generated an additional US$696m in revenue during Q2, a 9% decrease year-over-year.

Regionally, equity revenue fell 33% in EMEA and 19% in North America compared to the same period last year. A 22% decline in fees in North America and a 23% dip in EMEA accounted for the majority of the decreased revenue. Equity revenue in APAC increased 8% thanks to a 13% increase in fees.

Global fixed income performance declined by 11% in Q2 year-over-year. While revenue from government securities was roughly flat, corporate debt revenue fell by 32%, a regression of a trend which saw corporate bonds running hot through much of 2022 and 2023. 

In June 2024, the global securities finance industry generated US$790m in revenue for lenders. The figure represents an 11% decrease year-over-year from the US$888m generated in June 2023. Broker-to-broker activity totalled an additional US$207m in revenue in June, also an 11% decrease year-over-year.

 

Pan-European Verification of Payee specs published for PSPs

EBA Clearing has announced the publication of the user specifications for its Verification of Payee (VOP) solution. The specifications are based on the proposal of the European Payments Council’s VOP Scheme Rulebook.

The solution will leverage building blocks of its recently launched Fraud Pattern and Anomaly Detection (FPAD) functionality to provide a comprehensive IBAN/name matching solution with a broad reach across the single euro payments area (SEPA) starting from December 2024. The delivery should be completed 10 months before the October 2025 deadline set by the Instant Payments Regulation, when the obligation for payment service providers (PSPs) in the eurozone to provide a Verification of Payee service to their customers will come into force. 

FPAD is an integral part of the pan-European retail payment systems STEP2 and RT1 and has been available since March 2024. It provides the users of both services with a range of real-time fraud prevention and detection tools. The functionality already allows PSPs to conduct beneficiary name verifications before a payment is sent. With the December 2024 delivery, this functionality will be enriched with the EPC VOP Rulebook requirements.

PSPs will have different options to leverage the Verification of Payee capabilities of FPAD, both on the requesting and responding side. This is designed to allow PSPs to adapt their approaches over time, while ensuring full pan-European reach from the start. Using the FPAD capabilities also enables PSPs to address risk considerations and limit friction for end users, in addition to fulfilling compliance requirements.

 

Basware integrates Amazon Business to streamline procurement

Basware has announced its integration with Amazon Business to streamline the purchasing and procurement process for customers. The new Amazon Business Integrated Search feature will allow buyers to search for items from Amazon Business and checkout directly within Basware’s Procurement solution.

Alongside its AP automation platform, Basware Procurement offers businesses a consumer-style shopping marketplace. While searching for products, buyers can now browse and compare items from Amazon Business and other suppliers. With an Amazon Business account on Basware’s Procurement solution, buyers can select Amazon Business items, verify product details, delivery options, and payment methods in seconds. Similar to the Amazon consumer shopping experience, customers can add items, return to their Basware Procurement basket and proceed to checkout in a few clicks.

Procurement leaders juggle numerous responsibilities, facing challenges like supply management, rogue purchasing and lack of transparency. These challenges directly impact the organisation’s bottom line. From mitigating risks to enhancing transparency through automation, Basware said in a statement that addressing these challenges are essential for streamlined procurement processes and business success.

 

BNP Paribas extends relationship with CobaltFX 

BNP Paribas has extended its relationship with United Fintech-owned CobaltFX by deploying the fintech’s recently launched Analytics solution. This solution builds on the firm’s core Dynamic Credit product.

CobaltFX says that BNP Paribas is now covering more than 100 counterparty banks across 12 electronic communication networks (ECNs), and the analytics package allows it to hone its use of credit even further by highlighting where it can be reduced while expanding the bank’s ability to trade in the markets.

“We see this as an important initiative to address regulatory and industry body concerns about the over-allocation and inefficiencies of credit distribution on dealer-to-dealer venues,” said Joe Nash, head of global macro digital at BNP Paribas. “Moreover, this approach, combined with CobaltFX Analytics allows us to right size our limit for each counterparty whilst improving market access with them.”