PMI Surveys Reveal Diverging Trends, Sending Euro Lower
May 2, 2012
The dollar is 0.8% stronger against the euro and up 0.7% versus the Swiss franc. The dollar shows smaller advances of 0.3% relative to the kiwi, 0.2% versus the yen and sterling and 0.1% against the Canadian and Australian dollars. The greenback rebounded as well to CNY 6.30 against the Chinese yuan.
Share prices advanced by 2.3% in Taiwan, 2.2% in China, 1.1% in New Zealand 1.0% in Hong Kong, 0.9% in Singapore, 0.8% in Malaysia, but only 0.3% in Japan and 0.1% in Australia. In Europe, the British Ftse fell by 0.4%, while the German Dax rose 0.4%. The Paris Cac is 0.8% higher.
Gold and oil prices dropped 0.5% to $1653.80 per ounce and $105.69 per barrel.
The yields on ten-year British gilts and German bunds slipped by four and two basis points. The 10-year Japanese JGB yield is a basis point firmer.
The U.S. manufacturing purchasing managers index, reported Tuesday, surprised on the upside, climbing 1.4 points to a 10-month peak of 54.8. New business orders and production improved more rapidly than the overall index.
European PMI readings have been disappointing in contrast. Within the euro area, for example, the overall factory PMI for the whole region tumbled 1.8 points to a 34-month low of 45.9. Germany’s 46.2 score of 46.2 sank to a 33-month low and 2.2 points lower than the March reading. France scored a 46.9, down from 46.7 in March and at a 2-month low. The Italian reading of 43.8, a 6-month low, Spain’s 43.5, a 34-month low, and Greece’s 40.7, a 2 month low were far below the 50 no change level and thus conveyed very deep recession. The Dutch 49.0 constitutes a 3-month low, and Austria’s 51.2 a four-month low. Ireland’s 50.1 was a two-month low. These data indicate that the ECB has been too optimistic about growth prospects and that collective austerity by everybody at the same time is a flawed strategy.
Elsewhere in Europe,
- Sweden’s PMI of 50.2 was a tenth of a point better than in March and at a 2-month high.
- The Swiss reading of 46.9 was about 3.5 points weaker than forecast and the lowest score since 44.8 in November.
- Poland’s 49.2 was also below expectation, as well as below 50 after three straight readings of at least 50.
- The Czech reading of 49.7 followed 50.5 in February and 52.1 in March.
- Hungary’s PMI plunged over ten points to 46.9, lowest since August 2009.
- Norway’s reading fell by 5.6 points to 53.7, lowest since December.
- Russia’s PMI reading of 52.9 was the best in 13 months and embodied faster growth in both output and orders.
- The British construction purchasing managers index printed at 55.8, a solid result by 0.9 points less than in March.
China’s HSBC PMI in manufacturing was revised upward to 49.3 from a preliminary reading of 49.1 and was the best score in six months. Along with the Chinese CFLP purchasing managers index, reported Tuesday, that improved by 0.2 to 53.3, the HSBC result signifies that the economy is on a soft landing trajectory rather than a harder one. More policy relaxation is to be expected soon.
India’s PMI edged up 0.2 points to a strong 54.9 reading in April. The average Indian score in 1Q12 was 56.25.
Taiwan’s PMI fell to 51.2 from 54.1 in March and 52.7 in February. Production and orders grew more slowly than in March.
Turkey’s score of 52.3 was the best since November.
South Korea’s PMI reading of 51.9 last month compared to 46.4 in December, 49.2 in January, 50.7 in February, and 52.0 in March.
Indonesia’s 50.5 reading was at a 3-month low and was accompanied by accelerating inflation.
Japan’s service-sector purchasing managers index showed weaker activity growth, posting a 51.0 in April after 53.7 in March, 51.2 in February and another 51.0 score in January.
Euro area unemployment increased to a record 10.9% in March from 9.9% a year earlier and 10.8% in February and January. Youth unemployment exceeded 22% at 22.1%.
The Bank of Thailand and National Bank Romania held interest rate policy meetings in which no change was made.
- Thailand retained a 3.0% key interest rate level as analysts expected.
- Romania’s central bank kept a 5.25% benchmark instead of easing to 5.0% as most forecasters were anticipating.
Japan’s monetary base was 0.3% less in April than a year earlier. Such had risen 15.2% in 2011 and by 8.4% between 1Q11 and 1Q12. Wage earnings in Japan were 1.3% higher than a year earlier in March after posting only a 0.1% uptick in the year to February.
New Zealand commodity prices fell another 4.5% in April. Consumer confidence in Thailand ticked up a point to a reading of 67.5 in April.
German labor statistics for April were disappointing. Seasonally adjusted unemployment went up 19K, defying an expected drop of about that amount, and the jobless rate stayed at 6.8% instead of dipping further to 6.7%. Such has been at 6.8% for five consecutive months. Employment was 1.5% greater in March than a year earlier.
British M4 money dropped 0.8% in March and fell by 5.0% from a year earlier. Mortgage approvals totaling 49,860 in March surpassed expectations and the February total of 49.0K. Consumer credit expanded GBP 0.4 billion in the month.
U.S. data releases today feature factory orders, the ADP estimate of private-sector jobs, and weekly oil inventories. Lacker and Tarullo of the Federal Reserve will be making public comments.
Copyright 2012, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
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