Euro Rose on the First Business Day of March

March 2, 2015

The dollar kicked off a new month with gains of 0.5% against the kiwi, 0.4% relative to the Australian dollar, 0.3% against sterling, 0.2% versus the yuan, loonie and Swiss franc, and 0.1% vis-a-vis the yen but loss of 0.3% against the euro.

The 12-month rate of consumer price decline in the eurozone was halved to 0.3% in February from 0.6% in January.  This was the third straight outcome below zero, but core inflation stayed at 0.6%.  Such had been at 0.7% each month of the fourth quarter last year.  Energy sank 7.9% on year, which services went up by 1.1%.

Euroland’s jobless rate slipped to 11.2% in January from 11.3% in December and 11.8% in January 2014.  Youth unemployment fell by 0.2 percentage points to a still painfully high 22.9%.

Euroland’s factory purchasing managers index for February matched January’s 6-month high of 51.0.  The data revealed a three-speed regional economy.  Ireland clocked a 182-month high of 57.5, followed by Spain’s 54.2 reading, a 2-month low but with the fastest growth in orders in 94 months.  Expanding but only modestly were Germany (a 2-month high of 51.1), The Netherlands (52.2, a 5-month low) and Italy (a 7-month high of 51.9).  Lagging behind were the sub-50 scores for Austria (48.7, a 2-month high), Greece (48.4, a 2-month high) and France at 47.6, a 2-month low. 

Italian real GDP contracted 0.4% in 2014, a quarter as much as in 2013, and was associated with a fiscal deficit equal to 3.0% on GDP.

Belgian GDP growth last quarter got revised upward to 0.2% from 0.1% estimated earlier and was associated with a 1.0% on-year advance.

Finnish GDP contracted 0.2% in 4Q, its first decline since 1Q.  GDP also fell 0.2% between 4Q13 and 4Q14.

Portuguese retail sales rose 2.2% in the year to January, but industrial production fell by 2.1%.

Greek financial markets are showing continuing strain.  Stocks have fallen today so far by 2.7%, and the 10-year Greek government bond yield is four basis points higher.

Share prices in the Pacific Rim rose 0.8% in China, 0.6% in South Korea, 0.5% in Australia and Indonesia, 0.3% in Hong Kong and India and 0.2% in Japan and New Zealand.  In European bourses besides Greece, stocks are down 0.2% in Britain, 0.8% in France, 0.2% in Italy and Great Britain and 0.1% in Germany and Spain.

Comex gold ($1,213.30 per ounce) is unchanged.  WTI oil is down 0.9% at $49.30 per barrel but higher than its sub-$49 intra-day low.

The 10-year U.S. Treasury, Japanese JGB, and German bund yields are each a basis point firmer.

Manufacturing PMI survey results from February were reported for numerous other economies.

  • The Institute of U.S. Supply Management reported an larger-than-expected 0.6-point decline in the U.S. PMI to 52.9.  Markit Economics also compiles a U.S. PMI in manufacturing, which in contrast reflected a faster expansion rate with an above-50 reading of 55.1 in February versus 53.9 for January.
  • China’s HSBC PMI rose 0.6 points to a 7-month high of 50.7.  This connotes weak growth following modestly sub-50 scores in both December and January.
  • The government-compiled Chinese PMI in manufacturing was 49.9 in February versus 49.8 in January and 50.1 in December.  The Chinese government also announced that the PMI-services index rose 0.2 points to 53.9 in February.
  • Japan’s factory PMI sank to a 7-month low of 51.6 in February from 52.2 in January.
  • The shock of Switzerland’s removal of a cap on franc strength against the Euro is reflected in sub-50 PMI manufacturing scores of 47.3 in February after 48.2 in January and 53.6 in December.
  • The British factory PMI climbed a whole point to a 7-month high of 54.1 in February.  The U.S. manufacturing sector’s economy has found renewed vigor this year after some loss of momentum in the latter months of 2014.
  • Russia’s manufacturing PMI of 49.7 last month was higher than expected, 2.1 points better than in January, and the best score since November.  Russia appears to be compensating for loss of foreign orders with better domestic demand.
  • Australia’s PMI slumped to 45.4 from 49.0.  This was a disappointing release.
  • South Korea’s PMI of 51.1 matched the January reading, and production grew at the quickest pace since Aparil 2013.
  • Indonesia’s PMI reading of 47.5 was at a record low and a full point lower than January’s score.
  • India’s PMI fell to a 5-month low of 51.2 from 52.9.
  • Taiwan’s PMI reading of 52.1 after 51.7 was the highest since September.
  • Vietnam’s PMI of 51.7 was 0.2 points above the January score but lower than December’s 52.7.
  • In Turkey, the manufacturing purchasing managers index was below 50 for a second time in a row and the worst reading, at 49.6, since July.
  • Poland’s PMI was solid at 55.1 but not quite as much so as the 11-month high of 55.2 in January.
  • The Czech PMI slid to a 2-month low of 55.6 from 56.1.
  • Hungary shot a 54.9, its best PMI since November.
  • Sweden’s PMI fell 1.8 points to a 3-month low of 53.3.
  • Norway’s PMI eased to a 2-month low of 51.2.  The plunge of oil prices continues to take a toll on Norway.
  • Canada’s PMI fell 2.3 points to a sub-50 reading of 48.7 in February.  Such had been at 55.3 as recently as October-November.
  • Brazil’s PMI fell below 50 for the second time in four months, declining by 0.9 points to 49.6.

Business capital spending in Japan last quarter rose 2.8%, only about half as much as assumed in the first estimate of GDP growth.

New home sales in Australia rebounded 1.8% in January, reversing a 1.9% decline the month before.  Expected Aussie CPI inflation over the coming year continued to dip in the latest monthly survey, reaching just 1.3%.  Australian gross corporate profits slid 0.2% in 4Q, less than expected.

The British Nationwide index of home prices slowed to a 12-month pace of 5.7% in February from 6.8% in January.  M4 money in the U.K. fell 2.2% in the year to January, and mortgage applications totaled 60.8K, up marginally from 60.35K in December.

U.S. personal consumption fell 0.2% in January after a 0.3% fall in December, but real disposable income jumped 0.9%.  The savings rate increased to 5.5% from 5.0%.

U.S. construction spending fell 1.1% in January.

Canada’s C$ 13.917 billion current account deficit last quarter was 45% wider than the shortfall in 3Q14 and the biggest gap in a year.  Canada is struggling from the implosion of energy prices.

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

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