Euroland and British PMI-Mf’g Readings in January Surpass Forecasts

February 1, 2010

The dollar gained 0.7% against sterling and 0.5% relative to the Australian dollar overnight.  Other dollar rates have moved only marginally, with 0.1% upticks against the New Zealand and Canadian dollars and downticks of 0.2% against the Swiss franc and euro.

Stock markets fell at least 1% in China, Taiwan, the Philippines and Australia.  Bourses firmed 0.6% in Hong Kong and 0.3% in South Korea and have traded up 0.3% in Britain and 0.1% in Germany.

Ten-year bund and JGB yields slid 1 basis point and rose 2 basis points, respectively.

Oil and gold prices are also narrowly mixed, respectively having risen 0.2% and fallen 0.2% to $73.18 and $1083.80.

Euroland reported a PMI score in January among manufacturers of 52.4, above the 52.0 preliminary indication and December’s 51.6 reading.  Such was the fourth month with a reading of at least 50 and represents a two-year high.  Not all ships within the common currency bloc are rising however.

  • The readings in Germany, France, Italy and the Netherlands were 53.7, 55.4, 51.7 and 54.8.
  • The Greek, Spanish, Irish scores were 48.6, 45.3, and 48.1.

The British PMI reading of 56.7 was nearly three points better than assumed and followed 54.6 in December and 51.8 in November.

The Swiss PMI-mf’g reading of 56.0 was 2.3 points higher than in December and also better than expected.

Among Nordic economies, Norway reported a purchasing managers index of 50.1 after a score of 47.6.  Denmark’s index jumped to 57.1 from 49.7.  Sweden’s index likewise improved to 61.7 from 58.2.

Among East and central European countries, the Czech PMI rose to 53.1 from 50.8, Poland’s index slid to 51.0 (still connoting expanding manufacturing activity) from 52.4, and Russia’s index swung above 50 to 53.0 from 48.1 in December.

Manufacturing is really cooking in China (with a PMI reading of 57.4 after 56.1) and India (57.6 after 54.6).  Elsewhere in Asia, PMI-mf’g readings rose to 55.6 from 52.8 in South Korea, climbed to 61.7 from 58.7 in Taiwan, and advanced to 53.5 from 48.5in Hong Kong.

South Africa’s PMI-mf’g was also above 50 at 53.6.  Turkey’s index increased to 53.0 from 50.6.  Australia’s swung to 51.0 from a sub-50 score of 48.5 in December.

Australia also reported a 5.5% jump in house prices last quarter and an increase of 13.6% from the fourth quarter of 2008.  But job ads fell 8.1% in January after increasing 4.6% in December.  More importantly, the TD-MI index of inflationary pressure posted a 0.8% monthly increase in January, most in a half-year and suggesting that the central bank may again raise interest rates on Tuesday.

Japanese auto sales were 37% greater than a year earlier in January.

French producer prices firmed 0.2% in December but recorded a 2.9% on-year decline.

Consumer price inflation accelerated to 3.1% and 3.2% in South Korea and Indonesia in January from 2.8% in each economy in the year to December.  Thai consumer price inflation intensified to 4.1% in January from 3.5% in December.  Retail sales in Hong Kong were 11.3% greater than a year earlier in December, a pick-up from 10.0% in November, 8.3% in October and just 1.2% in the year to September.  South Korea posted a $470 million trade deficit in January, but on-year growth in exports of 47.1% and imports of 26.7% were both much stronger than that seen in December. India’s $3.0 billion trade surplus in December was 58% larger than its November Surplus.  Inflation in India accelerated to 3.7% on year in January from 2.8% in December.

Britain’s Hometrack house price index firmed 0.1% in January but was 0.8% lower than in January 2009.  Final indications put U.K. M4 in December 6.4% above its year-earlier level, a deceleration from a 9.3% gain in November.  Net mortgage lending of Gbp 1.2 billion in December was down from Gbp 1.6 billion in November and also less than in the prior month.  Mortgage approvals amounted to 59K, also somewhat shy of expectations.

Scheduled U.S. data today include the January purchasing managers index in manufacturing, personal consumption and spending, and construction spending.  Geithner gives more testimony.

Copyright Larry Greenberg 2010.  All rights reserved.  No secondary distribution without express permission.



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