Mixed PMI Signals

June 23, 2014

The dollar has fallen 0.9% against the Australian dollar, 0.4% versus the kiwi, 0.3% vis-à-vis the yen, and 0.1% relative to the loonie.  The U.S. currency is unchanged against the Swiss franc, yuan and sterling and has risen 0.1% against the euro.

A 1.7% drop in the Hang Seng index was the largest daily decline of Hong Kong’s stock market since March 20.  Worries about the Chinese property market were blamed, but Chinese equities edged only 0.1% lower.  Japan’s Nikkei closed 0.1% firmer.  Stocks in Europe have weakened.

The 10-year British gilt slid a basis point, while Japanese JGBs and the German bund are unchanged.

Gold firmed 0.3% to $1,312.40 per ounce.  Oil rose 0.2% to $107.07 per barrel.

The Chinese and Japanese PMIs in June performed better than anticipated, while Euroland’s were worse.

  • China’s HSBC-compiled manufacturing purchasing managers index rose 1.4 points to a 7-month high of 50.8, conveying positive growth for the  first time since December.
  • Japan’s PMI improved 1.2 points to 51.1, a 3-month high and above the 50 neutrality line for the first time since March.
  • Euroland’s composite PMI score of 52.8 was down from 53.5 in May and a 35-month peak of 54.0 in April.  This signaled the weakest growth since December and fell below analyst expectations.  The manufacturing PMI was off 0.3 points to a 7-month low of 51.9.  Services dropped 0.4 points to a reading of 52.8, a 3-month low.  But peripheral nations enjoyed their best performance since 3Q07.
  • The German economy showed slower growth in June than in the April or May, but PMI results nonetheless suggest quarterly growth of about 0.7%.  The composite German PMI printed at 54.2, down from 55.6.  Manufacturing edged up marginally to a 2-month high of 52.4.  Services fell 1.2 to 54.8, a 2-month low.
  • French GDP appears likely to have contracted marginally.  France’s composite PMI of 48.0 was down from 49.5 in May, 50.6 in April and 51.8 in March.  Manufacturing touched a 6-month low.  Services were at a 4-month trough.

CPI inflation in Singapore rose to 2.7% last month from2.5% in April.  Hong Kong’s rate of CPI inflation stayed at 3.7%.

Japanese supermarket sales recorded a much smaller on-year decline in May of 2.7% after a drop of 5.4% in April.  BOJ Governor Kuroda urged more meaningful structural reforms and stressed that export demand holds the key to overall Japanese growth prospects in the near term.

The Swiss current account surplus in the first quarter, CHF 29.1 billion, was 37% wider than in 4Q13.  M3 money growth decelerated to 7.6% last month from 8.0% in April.

U.S. existing home sales and the Chicago Fed National Activity Index get reported today.  The Bank of Israel reveals its latest policy decision on interest rates.

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






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