PMIs and an ECB Press Conference

April 3, 2014

Prior to the ECB announcement, the dollar was narrowly up by 0.3% against the kiwi, 0.2% versus sterling and 0.1% relative to the euro, yen, Aussie dollar and Chinese yuan.  The Swiss franc is steady, and the loonie has firmed 0.2% against its U.S. counterpart.

China’s government unveiled some tax cuts and other steps to support its elusive 7.5% growth goal.

Share prices fell by 0.7% in China and 0.2% in Taiwan, South Korea and India but rose 0.8% in Japan, 0.9% in Singapore, 0.4% in Indonesia, 0.2% in Hong Kong and 0.1% in New Zealand and Australia.  The British Ftse and Paris Cac are unchanged, but Spain’s IBEX has risen 0.7%.  Stocks also are up 0.4% in Italy and 0.1% in Switzerland but off 0.1% in Germany.

Gold and oil prices fell by 0.5% to $1,283.50 per ounce and 0.4% to $99.19 per barrel.

Ten-year Japanese JGB and German bund yields are up two and one basis points, while the 10-year British gilt yield is a basis point lower.

The ECB Governing Council did not change its refinancing, deposit or marginal lending rates, which stay at 0.25%, 0.0% and 0.75%, respectively.  Draghi’s press conference starts at 12:30 GMT.

Numerous service-sector and other purchasing manager surveys were reported.  Scores of 50.0 separate expansion from contraction in these highly watched diffusion indices.

Euroland’s composite PMI was revised down a tick to 53.1 in March from a preliminary estimate of 53.2 and a February reading of 53.3.  This was a two-month low.  The services PMI of 52.2 was down from February’s 32-month high of 52.6.  The data point to 1Q14 GDP growth of around 0.5%, best since the first half of 2011.

German and French PMIs moved in opposite directions.

  • The German composite score was revised to a 5-month low of 54.3 from 55.0 reported ten days ago.  The services PMI of 53.0 versus 55.9 in February was also a 5-month low.
  • The French composite PMI of 51.8 was revised upward by 0.2 and represents a 31-month high.  The services PMI of 51.5 after 47.2 in February is a 26-month peak.

Ireland’s services purchasing managers index rebounded to 60.7 after falling to 57.5 in February following 61.5 in January.  Ireland also recorded an 85-month high in its composite PMI of 59.0.

Italy recorded 3-month and 2-month lows of 51.1 in its composite PMI and 49.5 in its service-sector purchasing managers index.

Spain’s composite PMI of 54.2 and services PMI of 54.0 were each two month highs, in contrast.

The British service-sector purchasing managers index fell 0.6 points to a nine-month low of 57.6 in March.

Sweden’s services PMI fell 3.3 points to a 5-month low of 53.5.

Japan’s composite PMI rebounded to a two-month high of 52.8 in March after falling to 52.0 in February from 54.1 in January.  The services PMI rose 2.9 points last month to 52.2, a 5-month high, but doubts persist that the figure was only buoyed by pre-tax hike shopping.

HSBC’s composite Chinese PMI recorded a second straight sub-50 reading of 49.3 in March after 49.8 in February, 50.8 in January and 51.2 in December.  The services PMI was 51.9, up from 51.0 in February.

The Australian services PMI dived back to a 3-month low of 48.9 in March after leaping to 55.2 in February from 49.3 in January.

Russia’s PMIs add to evidence that its economy has relapsed into recession.  The Composite PMI of 47.8 was the weakest since May 2009, and the services PMI of 47.7 reflected the fastest rate of decline since August 2010.

India’s Composite PMI sank to a 3-month low of 48.9 from 50.3.  Prior to February the index had also been south of the 50 threshold.  The services PMI in India printed at a 3-month low of 47.5 after 48.8 in February.

Hong Kong’s private purchasing managers index dropped to 49.9 in March from a 35-month high of 53.3 in February.

Egypt’s non-oil PMI slid to a 2-month low of 49.8 from 50.0, and Saudi Arabia’s reading of 57.0 was at a 5-month low.  But the United Arab Emirates non-oil PMI of 57.7 after 57.3 was the best score since November.

The South African private sector PMI dropped 1.3 points to a 5-month low of 50.2, signifying stagnation more or less.

Lebanon’s 46.2 private PMI constitutes a 3-month high.

Late Wednesday came unexpected news from Brazil’s central bank that the policy-making committee, Copom, had lifted the Selic rate to 11.0%.  The 25-basis point hike follows a similar move on February 26 and hikes of 50 bps in January, November, October, August, July, and May.  This string of increases in the face of accelerating inflation began with a 25-basis point hike in April 2013 from a base level of 7.0%.

Retail sales volume in the euro area rose unexpectedly for a second straight month in February, climbing 0.4% on month and 0.8% on year.  The January-February level of sales was 0.8% greater than the 4Q13 mean.  Sales had declined 0.5% in the fourth quarter (2% annualized).

Japanese stock and bond transactions last week generated a JPY 1.304 trillion net capital outflow after an outflow of JPY 1.043 trillion the week before.

Consumer confidence in Thailand slipped 0.9 points to a reading of 68.8 in March.

Turkish PPI inflation edged down to 12.3% last month from 12.4% in February, but CPI inflation unfortunately accelerated 0.5 percentage point to 8.4%.  In Cyprus, consumer prices were 2.3% lower in March than a year before.

Scheduled U.S. data today are weekly jobless claims and monthly PMI services, consumer credit and trade deficit data.  Canada also reports trade.

Copyright 2014, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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