New Overnight Developments Abroad: Stronger Manufacturing PMI Readings

August 3, 2009

Another risk assumption play: stocks and commodities higher, and both dollar and yen are lower.

The dollar firmed 0.3% against the yen but fell 0.8% to a 9-month low against sterling.  The dollar also slid 0.7% against the kiwi, 0.6% against the Canadian dollar, 0.5% against the Aussie dollar, 0.3% against the euro and 0.2% against the Swiss franc.

The German Dax and British Ftse are trading 1.7% higher, and the Paris Cac has gained 1.6%.   Earlier in the Pacific Rim, stocks rose 2.8% in Thailand, 1.3% in the Philippines, 1.4% in China, 1.6% in India, 0.7% in Indonesia, 1.1% in Hong Kong and 0.5% in Australian and South Korea.  But Japan’s Nikkei closed unchanged.

Ten-year sovereign bond yields are higher in the United States, Germany, Britain, and Japan (+2 bps to 1.44%).

Oil climbed 1.6% to $70.54 per barrel.  Gold edged up 0.1% to $956.90 per ounce.

Canada is closed for Civic Day.  Canadian GDP in May was reported on Friday to have contracted by a larger-than-expected 0.5% from April and 3.5% from a year earlier, as industrial production plunged 1.9% (and 11.8% from May 2008).

Euroland’s manufacturing PMI improved to 45.7 in July from 40.9 in June, 39.6 in May, and 55.4 in April.  The final reading exceeded the July preliminary score of 45.2, suggesting that momentum carried into August.

  • The subcomponents for both new orders and production had readings above 50, indicating expansion, but jobs continued to contract.
  • The Geman PMI advanced 4.8 points to 45.7 and was 10.3 points better than in April.
  • The French PMI rose 2.2 points to 48.1 and was 8 points higher than three months earlier.
  • Italy’s PMI reached an 11-month high of 45.4, still far from 50 but 2.7 points above the June reading.
  • Spain’s PMI climbed 4.5 points to 47.3, best since January 2008.  Orders expanded (with a reading above 50), but jobs contracted sharply.
  • Ireland’s PMI remained mired at 43.7 versus 42.5 in June and 36.1 in April.
  • The Dutch PMI improved 2.2 points to 46.6.

Britain’s factory PMI topped 50 with a reading of 50.8 in July compared to 47.4 in June, 45.4 in May and 43.1 in April.

German retail sales disappointed yet again.  Instead of firming 0.5% in volume as expected, such fell 1.8% in June after tumbling 1.3% in May.  June’s level was 1.7% below the 2Q mean.

Numerous other country PMI-manufacturing reports also were released.  The Swiss index rose 2.5 points to 44.3.  The Swedish index of 54.8 was the best in 16 months and 4.8 points above the June level.  In Eastern Europe, Poland’s index rose 3.5 points to 46.5, Hungary’s index recovered another 3.2 points to 49.2, the Czech index gained 1.5 points to 43.4, and the Russian index rose 1.1 points to 48.4.  China’s PMI advanced a point to 52.8, exceeding 50 for a fourth straight time.  India’s PMI remained at 55.3, and the jobs sub-index was still below 50.  Australia’s PMI gained 6.1 points to 44.5, which also was 14.4 points better than in April.  Hong Kong’s PMI increased 2.8 points to 49.9, 11.1 points better than last November.  The Turkish PMI ticked up a tenth to 54.0, best since September 2006.  But the South African PMI regressed back to its May reading of 37.3 from 37.9 in June.

Spanish car sales fell less sharply in the year to July (10.9%) than in the year to June (16%).  French car sales increased 3.1% last month.

Japanese auto sales declined much less sharply, posting an on-year drop of 5.2% in July versus drops of 14.3% in the year to June and 19.2% in the first seven months of 2009.

Japanese labor cash earnings recorded a record 7.1% on-year plunge in June due to a 14.5% decline in bonus pay.

Consumer confidence in New Zealand improved to a 7-year high in July.  Australian job ads posted a reduced 1.7% on-year drop in July after falling 6.7% in the year to June.

The British CBI’s survey of small manufacturers showed negative readings for orders and output.

South Korea’s trade surplus narrowed 29.3% to $5.14 billion in July from $7.27 billion in June.

Polish consumer price inflation remained at 3.5% in July.  Thai consumer prices fell 4.4% in the year to July, the 7th sub-zero reading in a row.  South Korean CPI inflation slowed to 1.6% in July from 2.0% in June and 2.7% in May.

The U.S. releases its PMI report and construction spending later today.  Bank Indonesia is seen likely to hold its benchmark interest rate steady.

Copyright Larry Greenberg 2009.  All rights reserved.  No secondary distribution without express permission.


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