PMI’s, Japanese Trade, British Retail Sales, and an Important New Zealand Statement
July 24, 2014
Preliminary purchasing manager survey results for July showed
- An 18-month high in Chinese manufacturing growth.
- Faster euro area growth especially in the services but also manufacturing.
- Slower manufacturing growth in Japan.
Japanese customs trade data for June also were disappointing. There was an unadjusted JPY 822 billion deficit, which was the 24th shortfall in a row. For a second consecutive month, moreover, exports were weaker than a year earlier, this time by 2.0%. Export volumes fell 1.7%, while export prices dipped 0.3%. The seasonally adjusted 1.081 trillion yen trade deficit was at a three-month high.
British retail sales in June only edged 0.1% higher. Excluding autos and auto fuel, such slipped 0.1% instead of rising 0.3% as expected, and this resulted in a 4.0% on-year gain versus forecasts of 4.6%.
The Reserve Bank of New Zealand announced its fourth 25-basis point interest rate hike since March. However, an accompanying statement from Governor Wheeler indicated that policy would now shift to wait-and-see mode to enable officials to judge the impact of the cumulative rise in the rate to 3.5% from 2.5%. Wheeler moreover warned, “the level of the New Zealand dollar is unjustified and unsustainable and there is potential for a significant fall.” This forceful language depressed the kiwi by 1.3% overnight against its U.S. counterpart.
Otherwise, the U.S. currency is unchanged against the loonie and Swiss franc, 0.1% softer versus the euro and yuan, up 0.2% relative to the Australian dollar and sterling and 0.1% firmer vis-a-vis the yen.
Share prices are mostly higher. Dips of 0.3% in Japan’s Nikkei and 0.1% in the South Korean Kospi index are notable exceptions. Equities rose 1.8% in China, 0.7% in Hong Kong, 0.6% in New Zealand, 0.5% in India, 0.4% in Singapore and 0.2% in Australia. European stocks show advances of 1.6% in Italy and Spain, 0.8% in France, 0.6% in Germany and Switzerland but just 0.1% in Britain.
Whereas ten-year British gilt and German bund yields are up by three and one basis points, the 10-year Japanese JGB edged down a basis point.
Gold and oil slipped by 0.4% to $1,301.40 per ounce and 0.3% to $102.78 per barrel.
China’s preliminary HSBC manufacturing PMI index rose 1.3 points to an 18-month high of 52.0.
Japan’s manufacturing purchasing managers index fell by 0.7 points to 50.8, a 2-month low.
Euroland’s PMI surveys in July are consistent with growth of about 0.4% overall and the fastest expansion in the peripheral members of the currency union since 2007. Euroland’s composite purchasing managers index of 54.0 was 1.2 points better than in June and matches the recent peak in April. Manufacturing ticked 0.1 point upward to 51.9, but services jumped 1.6 points to a 38-month peak of 54.4.
Among Euroland’s two largest economies, the German composite PMI recovered all of June’s setback, rising to 55.9 after dropping to 54.0 in June from 55.6 in May. The German services index improved 2.0 points to a 37-month high of 56.6, while manufacturing advanced by 0.9 to 52.9. But France recorded a third straight sub-50 composite reading, which was 49.4 after 48.1 in June and 49.3 in May. French manufacturing was at 47.6, while services scored a 50.4. At best, the French economy is stagnating.
Euro area consumer confidence unexpectedly slipped by 0.9 points to a reading of -8.4 in July.
Italian consumer confidence weakened a point to a 4-month low in July of 104.6. Italian retail sales dropped in May by 0.7% from April and 0.5% from a year before.
Non-seasonally adjusted Swedish unemployment of 9.2% in June was at a four-year peak, but the adjusted 8.0% was unchanged from May. From a 41-month PPI high in May of 2.8%, producer price inflation in Sweden settled back to 2.3% last month.
Spanish unemployment eased to 24.5% last quarter from 25.9% in the first quarter of this year.
In the year to June, Finnish producer prices fell by 0.6%, and retail sales volume sank 1.7%.
In the Czech Republic, consumer confidence rose in June even as business sentiment weakened in July.
South Korea reported weaker GDP growth of 0.6% last quarter, which trimmed the on-year pace to 3.6% from 3.9% in 1Q. South Korean government officials afterward revised projected 2014 growth downward by 0.4 percentage points to 3.7% and announced an 11.7 trillion won package of fiscal stimulus.
New Zealand’s June trade surplus of NZD 247 million kiwi was slightly less than NZD 270 million in May but much stronger than forecast.
Scheduled U.S. data to be released today include new home sales, the K.C. Fed manufacturing index, Markit Economics’ preliminary estimated manufacturing PMI, and weekly jobless insurance claims.
Copyright 2014, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Japanese trade, purchasing managers indices, Reserve Bank of New Zealand
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