Tankan Survey and Flash Ezone PMI Results above Expectations

December 16, 2013

The dollar this Monday shows overnight declines of 0.4% against the Swiss franc, 0.3% versus the euro and 0.1% relative to the yen and sterling.  The greenback climbed 0.3% against the Australian dollar and 0.1% vis-a-vis the kiwi, and it is unchanged against the loonie and yuan.

Share prices mostly fell in the Pacific Rim but have advanced in Europe.  Equities dropped 1.6% in Japan and China, 1.2% in Indonesia, 1.0% in Thailand, 0.8% in Taiwan, 0.6% in Hong Kong, 0.4% in Singapore, 0.3% in India, 0.2% in Australia and 0.1% in South Korea.  Stocks have advanced 1.5% in Spain, 1.3% in Italy, 0.8% in France, 0.5% in Britain and 0.3% in Germany.

Ten-year sovereign debt yields dipped a basis point in Germany, Britain, and Japan.

Gold and WTI crude oil prices are up 0.3% and 0.5% at $1,230.50 per ounce and $97.12 per barrel.

There had been considerable anecdotal evidence in the press lately that the infatuation with Abenomics has faded, but the Bank of Japan quarterly Tankan survey of business conditions and expectations surprised significantly on the upside.  The summary measure for big manufacturers rose 4 points to 16, while that for large non-manufacturers went up 6 points to a reading of 20.  Small non-manufacturers had a positive reading for the first time since the 1990s.  There were upward revisions to projections of investment, sales and earnings.

Euroland’s composite purchasing managers index rose 0.4 points to a three-month high of 52.1 in December.  The fourth-quarter mean was the best in 2-1/2 years.  The December reading among manufacturers of 52.7 was at a 31-month high, but services slid 0.2 points to a 4-month low of 51.0.

Germany’s flash composite PMI dipped 0.2 points to a robust 55.2 reading including a 30-month high in manufacturing of 54.2. 

Markit Economics, which compiles these surveys, called France the new “sick man of Europe” after the French PMI scores fell to a 7-month low of 47.0 on the composite index, a 7-month low of 47.1 on the manufacturing index (which included a very depressed 45.3 reading on production), and a 6-month trough of 47.4 on services.

The HSBC Chinese manufacturing PMI fell 0.3 points to a 3-month low of 50.5 in December, depressing Asian equities.

Euroland recorded a wider EUR 14.5 billion seasonally adjusted trade surplus in October as imports fell by 1.2% while exports rose 0.2%.  The unadjusted EUR 122.8 billion surplus in January-October compares to a surplus of EUR 57.4 billion a year earlier.  Exports in the ten-month span rose only 0.9% on year, but imports contracted by 3.4%.

Producer prices in the Czech Republic rose 0.7% in the year to November, while those in Denmark fell by 2.2%. 

Italy’s trade surplus widened nearly fivefold on month to EUR 4.07 billion in October.  Norway’s trade surplus went up 26.7% between October and November.

Indian WPI inflation accelerated even more than predicted in November to 7.5%.  Elevated inflation has been a chronic problem for India even as most other economies face deflationary risks.

The British Rightmove house price index fell 1.9% this month but recorded a larger 12-month increase of 5.4%.

New Zealand consumer confidence improved 4.1% in December, according to the Westpac measure.

Investors await several U.S. data releases today: industrial production, capacity usage, the Empire State manufacturing index, quarterly productivity and unit labor costs, and the Treasury Department TIC report that documents international capital flows.  Draghi testifies in Parliament.  Schaeuble retains his finance minister post in Merkel’s new government in Germany.

Copyright 2013, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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