Both Encouraging and Discouraging PMI Survey Results

February 4, 2015

Euroland’s service-sector purchasing managers index was revised upward to a 5-month high of 52.7 in January.  That reading exceeded 51.6 in Decembere and 51.1 in November, helping to lift the composite PMI score to 52.6, best since July and consistent with 0.3% GDP growth if sustained through the current quarter.  The composite PMIs for Germany (53.5) and Italy (51.2) were at 3- and 2-month highs, and Spain’s 56.9 reading conveyed the strongest growth since August.  The French 49.3 score was at a 2-month low, as was Ireland’s 60.4.

Russia’s services PMI fell to 43.9 in January, and the composite Russian PMI of 45.6 was 1.6 points lower than in December and at a 68-month low.

HSBC estimated China’s January services PMI at a 6-month low of 51.8, and the composite Chinese score fell to 51.0 from 51.4.

Hong Kong’s private purchasing managers index relapsed in January, swing back under the 50 no change threshold to 49.4.  That was the fourth sub-50 reading in five months.

Other sub-50 PMI readings were reported for Brazil of 49.2 composite and 48.4 in services, Lebanon of 49.5, Lebanon of 49.5, South Africa (a 6-month low of 49.8), and Australia.

Australia’s 49.9 reading, however, was 2.4 points above the December services PMI score and stronger than its 12-month average reading of 48.3.  It appears that service sector activity may at least be stabilizing in Australia.

Japan’s service-sector PMI slid 0.4 points to 51.3 in January.  Japan’s composite PMI of 51.7 was also at a 2-month low.

Sweden’s service-sector PMI rebounded 2.5 points to a six-month high of 57.9 last month.

India’s survey revealed mostly solid results.  The services PMI rose 1.3 points to a 2-month high of 52.4, and the composite index of 53.3) also was at a 2-month high.

The British results (57.2 on services and 56.7 on the composite index) were above December levels and solidly in expansionary above-50 territory.

The dollar overnight rose by 0.2% against the loonie, euro and Swiss franc but slipped 0.5% relative to sterling and the kiwi, 0.2% versus the Australian dollar and yuan and 0.1% vis-a-vis the yen.

Share prices are moderately lower overseas for the most part, but there are exceptions in Japan (2.0%), Switzerland (1.6%) Australia (1.2%) and South Korea (0.6%).  Stocks declined 1.0% in China, 0.4% in India, and are down 0.6% in the U.K., 0.7% in Spain, 0.3% in France, 0.5% in Italy and 0.4% in Germany.

10-year sovereign debt yields jumped 11 basis points in Japan, and are up 2 bps in Germany and one bp in Britain.

WTI oil prices fell back 3.2% to $51.36 per barrel.  Comex gold is up 0.4% to $1,266.00 per ounce.

The Bank of Iceland, whose 7-day lending rate was sliced by 25 basis points in November and 50 bps in December, kept policy unchanged after its latest monetary policy meeting, surprising a number of analysts.

The National Bank of Romania cut its key interest rate by another 25 basis points to a record low of 2.25%, which was expected.

Retail sales volume in the euro area went up 0.3% on month in December and accelerated to a 2.8% on-year advance from 1.6% in November and October.  Sales increased 0.9% last quarter or 3.4% at an annualized rate.

Japanese labor cash earnings as expected posted a 1.6% on-year nominal increase in December.  In volume terms, such rose 1.4%.

British shop prices fell 1.3% between January 2014 and January 2015 according to the British Retail Consortium.  That was a larger drop than in December.

New Zealand unemployment unexpectedly increased to 5.7% last quarter from 5.4% in 3Q14.  Jobs were 3.5% greater than a year earlier and recorded a 7-quarter high 1.2% advance from 3Q.  Average hourly earnings grew only 0.4%.

Business confidence in Australia weakened to a reading of +2 last quarter from +6 in 3Q.  Business conditions stayed at +4.  The Reserve Bank of Australia cut its official cash rate yesterday to a record low of 2.25%, surprising many analysts.

The ADP estimate of U.S. private jobs growth in January, +213K, was less than forecast, but December’s rise was revised upward to 253K from 241K reported a month ago.  Still to come: U.S. service sector purchasing managers index and the Canadian IVEY-PMI services index.

Copyright 2015, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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