Service Sector Purchasing Manager Surveys Released

May 4, 2011

Japan remained closed for Greenery Day, the third of four Golden Week holidays.

Stocks fell by 2.6% in China, 2.4% in Pakistan, 1.3% in Singapore, 1.4% in Hong Kong and 0.9% in Australia and South Korea.  The British Ftse is down 0.5%.  The German Dax and Paris Cac are little changed, in contrast.

The dollar advanced 1.0% against the kiwi, but its other changes are minor.  It has risen 0.3% against the yen, 0.2% versus the Aussie dollar and 0.1% against the Canadian dollar and Swiss franc.  It also has lost 0.1% against the euro and sterling, while holding steady against the yuan.

The yields on ten-year British gilts and German bunds each rose three basis points.

Gold prices slid 0.3% to $1536.30 per ounce.  Oil is unchanged at $111.08 per barrel.

There was disappointing British data.  The U.K. holds particular importance for watchers of the U.S. economy because it is already implementing the kind of tough love fiscal austerity being urged in America and is not responding well to such.

  • The Nationwide house price index slid 0.2% and to a 12-month 1.3% rate of decline, worst since August 2009.
  • The Hometrack house price index fell 3.3% in the year to April, the biggest on-year decline in 18 months.
  • Shop price inflation accelerated a tenth to 2.5% after dropping to 2.4% in March from 2.7% in February.
  • The construction purchasing managers index sagged to 53.3 from 56.4 in March and an eight-month high of 56.5 in February.  Analysts were looking for a reading of 55.6.
  • On-year M4 growth of minus 1.1% in March was negative for a sixth consecutive month.
  • Mortgage loans, consumer credit and total lending posted small gains in March of GBP 0.4 billion, GBP 0.1 billion and GBP 0.5 billion.
  • Mortgage approvals of 47.56K in March fell slightly short of analyst expectations.

Euroland March retail sales were very disappointing, though partly distorted by the late Easter holiday this year.  Sales volume slumped 1.0% on month versus a projected 0.1% uptick and by 1.7% on year after posting a 1.3% rise in the year to February.  Sales were 0.7% below the 1Q average level and only managed a 0.3% annualized advance between 4Q10 and 1Q11.  The month-on-month drops in March amounted to 4.7% in Portugal, 1.0% in France, 1.4% in Spain and 2.1% in Germany.

The euro area service-sector purchasing managers index printed at 56.7, two-tenths less than the flash estimate and down from 57.2 in March, which had been the best result since August 2007.  Output prices had their highest reading since mid-2008.  The composite Euroland PMI was 57.8 in April, unchanged from its preliminary indication and the second highest score since June 2007, surpassed only by a reading of 58.2 in February of this year.  The April data suggest that the solid economic momentum in the first quarter did not abate at the start of the second quarter.

Germany’s composite PMI was 59.2 in April, revised down from a flash indication of 59.9.  The index had ranged between 60.3 and 61.3 during December-March, so German growth will not be as strong in 2Q as such was in the first quarter.  Germany’s service-sector PMI was 56.8, a six-month low and 0.9 points less than the preliminary reading for April and below 60.1 in March.

The French composite PMI score and services index score of 62.4 and 62.9 respectively represented 127-month peaks.  French GDP probably advanced some 0.7-0.8% not annualized in the first quarter and experienced even greater momentum at the start of 2Q.

Italy’s PMI-services index was 52.2 last month, down from 53.3 in March and a three month low.  Orders were nearly stagnant, and business expectations sank to a two-year low.  But input price inflation hadn’t been higher since October 2008.

Spain’s PMI in services printed at 50.4, 1.7 points better than forecast.  Such had been below 50, signifying falling activity, in seven of the prior eight months.

India’s composite PMI improved to 60.7 in April after scores of 60.0 in March, 61.0 in February, and 59.6 in January. Orders were at a 3-month low, but input prices sank to a 5-month low.  The Reserve Bank of India surprised analysts by doubling its incremental interest rate hike to 50 basis points this month.

Australia’s purchasing managers index in services improved five points to 51.5, breaking a five-month streak of sub-50 readings.

Poland finally reported its manufacturing PMI for April, which was at 54.4, thus lying between the March reading of 54.8 and February’s of 53.8.  Readings for production and demand showed slower growth than in March, however.

JP Morgan reported that the global PMI in manufacturing slid to 55.0 in April from 55.7 in March and 57.4 in February.

Portugal reached a tentative accord with its EU and IMF benefactors on terms for a three-year aid package.

Norwegian unemployment slid to 3.1% in the first quarter from 3.6% in 4Q.  Retail sales volume fell 0.5% on month in March.  Romanian retail sales were 4.8% lower in March than a year earlier, again partly reflecting the distortion of a late Easter.

South African auto sales were 8.0% greater than a year earlier in April.

New Zealand building permits rose 2.2% in March.

Scheduled U.S. data releases today include the April service-sector purchasing managers index, the Challenger job cuts data, the ADP estimate of private sector employment growth last month, and weekly oil inventory changes.  Three Fed officials will be speaking in public, Williams, Lockhart, and Rosengren.

Copyright Larry Greenberg 2011.  All rights reserved.  No secondary distribution without express permission.

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