Service Sector European PMIs Decent Enough

January 6, 2014

Overnight dollar changes limited to gains of 0.3% against the loonie and 0.2% versus the Aussie dollar and sterling.  The dollar also has dipped 0.1% against the yen and euro and is unchanged versus the kiwi, Swissie, and yuan.

Some Asian stock markets tumbled sharply.  reopening after the extended New Year holiday, the Nikkei dropped 2.4%.  Equities fell 2.3% in China, 1.3% in indonesia, 0.6% in Hong Kong and 0.5% in Australia.  The tone improved in Europe, where stocks are up 0.9% in Spain, 0.8% in Italy, 0.2% in Germany and 0.1% in France.

Ten-year British gilt yield is down three basis points, while the 10-year German bund and Japanese JGB yields are off two bps.

Oil is 0.3% firmer at $94.23 per barrel of WTI crude. Gold is 0.2% lower at $1236.80 per ounce.

The composite euro area purchasing managers index showed an unrevised 52.1 reading in December, completing a second half slate of above-50 scores and cementing the likelihood of positive growth in 4Q13 and even stronger growth in the first quarter of this year.  December’s reading was a 3-month high and accompanied by a reading of 51.0 for services, a 4-month low.

Within the euro area, Spain posted a composite PMI of 53.9, a 77-month high, and a service-sector PMI score of 54.2, also a 77-month peak.  The Italian composite and service-sector readings of 50.0 and 47.9 were each 2-month highs. Ireland’s 61.8 services PMI was at an 82-month peak, enough to drive the composite score up to a 2-month high of 58.6.  Germany’s composite and service-sector readings, 55.0 and 53.5, were at 2-month lows. France was the clear disappointment with a 7-month low on its composite PMI (47.3) and a 6-month low in services (47.8).

The British service-sector PMI checked in at 58.8.  Although a solid score, it was below 60 for the first time since 56.9 last June.  But business sentiment improved to the best reading since March 2010.

Norway’s manufacturing PMI fell to a 5-month low of 51.6 in December from 54.1 in November.

Japan’s composite PMI held steady at 54.0 last month.  The service sector PMI recovered 0.3 to 52.1 from a 3-month low seen in November.

HSBC reported Chinese readings of 51.2 on the composite PMI after an 8-month peak of 52.3 the month before and 50.9 on the services PMI versus 52.5 in November.

India’s service-sector PMI of 46.7 in December was below the 50 breakeven threshold for a sixth consecutive months.  The composite Indian PMI of 48.1 was below November’s score of 48.5 but above October’s 47.5.

The private-sector Hong Kong PMI retreated to 51.2 from November’s ten-month high of 52.1.

The non-oil PMI readings for Egypt and the U.A.E. slid by 0.5 and 0.7 points to 52.0 and 57.4.  The Saudi Arabian non-oil PMI, in contrast, showed a faster rate of expansion with a December PMI of 58.7 after 57.1 in November and 56.7 in October.

Australia’s service-sector PMI, 46.1, constituted the fastest contraction of activity in four months.  November’s reading had been 48.9.

South Africa scored a 50.5 in its purchasing managers survey for the final month of 2013, down from 51.6 and at a 3-month low.

The Sentix measure of investor sentiment toward the euro area improved 3.9 points to +11.9, its best value since April 2011.

Portuguese consumer sentiment and business confidence improved by 1.4 points and 0.2 points, but both readings — respectively minus 40.4 and -1.0 — remained below zero.

Among the first four reporting German states, two had slightly higher on-year inflation in December, while the pace in the others was unchanged from November.

British Chancellor of the Exchequer Osborne pledged that more fiscal austerity would be needed after the 2015 election.

Japanese motor vehicle sales registered on-year growth in December of 18.7% versus 12-month increases of 13.3% in November and 17.3% in October.

Scheduled U.S. data today are the service-sector PMI, factory orders and the NAPM index.  Canada releases producer prices.

Copyright 2014, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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