A Very Strong U.S. Non-Manufacturing Purchasing Managers Survey

August 5, 2015

The dollar appreciated 0.5% against the yen, 0.4% relative to the Australian dollar, 0.3% vis-a-vis the kiwi and Swiss franc and 0.2% versus the euro.  The dollar is down 0.3% against sterling and 0.2% versus the Canadian dollar but unchanged vis-a-vis the yuan.

Chinese (-1.7%) and Greek (-2.9%) stocks took another tumble.  In other stock markets, share prices rose 1.5% in Indonesia, Japan and Hong Kong.  There are gains so far of 1.7% in Italy, 1.2% in Spain, 1.6% in France and Germany, and 0.5-0.8% in North America.  Australia’s market fell 0.4%.

10-year sovereign debt yields jumped 11 basis points in Great Britain and rose 4 bps in the U.S. and 2 bps in Germany.  The 10-year dipped under 0.4% to 0.39%.

West Texas Intermediate oil firmed 0.9% to $46.16 per barrel. Comex gold eased 0.4% to $1,083.84 per ounce.

The U.S. Institute of Supply Management reported a 4.3-point improvement in the non-manufacturing PMI to 60.3 in July.  Production, new orders, and jobs respectively climbed by 3.4, 5.5 and 6.9 points in this strong report.

In other U.S. economic news, the goods and services trade deficit widened to $43.8 billion in June from $40.9 billion in May, as imports advanced 1.4% on month while exports slipped0.2%.  The first half deficit was merely 0.6% bigger than a year earlier, but that stability masks big bilateral swings.  The merchandise trade balance with OPEC improved $34.2 billion to a surplus of $1.2 billion, while the deficit with China grew $15.2 billion.  Trade with Europe also generated a wider deficit.  The ADP estimates that private U.S. jobs only increased 185K last month, 22% less than in June and well below what analysts are anticipating.  U.S. mortgage applications climbed by a large 4.7% last week.

In other purchasing manager surveys released today,

  • Euroland’s composite and service-sector scores rose to two-month highs of 53.9 and 54.0 July, consistent with GDP growth at the start of the quarter similar to the pace in the second quarter and implying growth in 2015 that is likely to fall near 1.5%.  German indices were the same as in June, Spain’s scores improved, and the French and Italian readings were lower than in June.
  • An 11-month high in China’s services PMI of 53.8 didn’t prevent the composite reading from sinking to a 14-month low of 50.2.  Price pressure has been deflationary.
  • Japan’s services PMI sank from June’s 9-month high of 51.8 back to a 4-month low of 51.2.  The composite 51.5 PMI was unchanged from June’s score.
  • India recorded composite and services PMIs of 52.0 and 50.8 with muted price pressure. The services score was above 50 for the first time since April.
  • Russia’s indices, which had each dipped to 49.5 in June, moved back above 50 but only slightly so in July.
  • The British services PMI fell 0.9 points to a 2-month low of 57.4, still conveying strength, however.  The composite U.K. PMI was 56.6.
  • Sweden’s services PMI rose 1.7 points to a 2-month high of 56.6.
  • Hong Kong’s private PMI posted a fifth straight score below 50, this time of 48.2 versus 49.2 in June.
  • Singapore’s private PMI ticked 0.2 points higher to 51.3.
  • South Africa’s private manufacturing PMI declined to a 12-month low of 48.9 from 49.2 the month before.
  • Lebanon’s private PMI stayed at June’s 5-month high of 49.3.
  • Australia’s services PMI leaped 2.9 points to an unexpected 17-month high of 54.1.
  • Brazil’s services and composite PMI scores were 39.1 and 40.8, even lower than the June readings.

New Zealand’s labor market weakened last quarter.  The 5.9% jobless rate compared to 5.8% in 1Q15, and employment growth slowed to 0.3%.  But labor costs accelerated to a rise of 0.5%.

Canada’s C$ 476 million trade deficit in June was 86% smaller than in May and the tiniest deficit since November 2014. 

The Bank of Thailand retained a 1.5% interest rate as expected.  The rate was cut twice by 25 basis points apiece during the first half of 2015.

Swiss consumer prices fell 0.6% on month and by a larger 1.3% on year in July.

Indonesian GDP grew 4.67% in the year to 2Q, similar but marginally below the first-quarter result.

Filipino consumer prices firmed 0.1% last month and were just 0.8% higher than in July 2014.

British shop prices sank 1.4% on year in July.

Retail sales volume in the eurozone fell by a larger-than-forecast 0.6% in June, cutting the 12-month rate of increase more than in half to 1.2%.  A 2.3% drop in Germany dominated the downturn.  Sales rose on month in Belgium, Austria, Ireland and France.

Copyright 2015, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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