U.S. PMI Disappointment

August 3, 2015

The dollar is little changed on this first trading day of August 2015.

The Greek stock market reopened to a 16.5% plunge after its extended closure.  Other European equities are up however by 0.8% in in Italy and Spain, 1.1% in Germany and 0.7% in France.  The British Ftse is unchanged, as is the DOW at this writing.

The Chinese Shanghai Composite index fell 1.1%.  Stocks dropped 1.2% in Hong Kong, 1.6% in Taiwan, 1.1% in South Korea and 0.2% in Japan.

Among 10-year sovereign debt yields, the U.S. Treasury and British gilt dipped a basis point, the German bund edged a basis point higher, and the Japanese JGB is steady at 0.40%.

West Texas Intermediate oil plunged 2.4% to $46.01 per barrel.  Comex gold slipped 0.3% to $1,092.75 per troy ounce.

Economic news overnight was dominated by the release of numerous manufacturing purchasing manager survey results for July, and the most surprising of these findings was a 0.8-point decline in the ISM’s U.S. index to 52.7.  This disappointment mainly reflected greater disinflation and a 2.8-point drop in the jobs sub-component and came despite faster growth in new orders and production.

In the eurozone, the PMI printed at a 2-month low of 52.4, which is a pretty resilient result after June’s 14-month peak of 52.5, especially in light of the Greek debt melodrama during the month.  The strongest operating conditions in Euroland occurred in The Netherlands (56.0), Italy (a 51-month high of 55.3) and Spain (53.6 yet a 9-month low).  Austria’s reading of 52.4 was a 17 month high, but Germany’s score fell back to a 2-month low of 51.8.  Greece posted a record low of 30.2, indicating sharply faster contraction following June’s reading of 46.9.  Manufacturing also contracted in France, where the July PMI slipped to a 2-month low of 49.6.

The British manufacturing PMI bounced off June’s 26-month low of 51.4 to 51.9, a 2-month high.

After touching the neutral 50.0 level in June, Switzerland’s manufacturing PMI sank back into contractionary territory with a reading of 48.7, which is a 3-month low.

Sweden’s PMI improved to a 3-month high of 55.2 and was 2.4 points better than in June.

Poland’s 54.5 score was at a 4-month high.  The Czech PMI of 57.1 was a 51-month peak.

Japan’s purchasing managers index printed at a 5-month high of 51.2 and was the third straight reading above 50.0.

But China’s PMI, like the U.S. report, was disappointing.  A score there of 47.8 was down from June’s 3-month high of 49.4 and also lower than may’s 49.2 reading.

Taiwan’s 47.1 showed the slowest rate of contraction since May.  The Vietnamese PMI of 52.6 also was at a two-month high, as was Malaysia’s 47.7.  India’s 52.7 reading rose by 1.4 points and was the best score since January.

But Indonesia (47.3) posted a two-month low, and South Korea recorded another sub-50 result, a score of 47.6 following June’s 33-month low of 46.1.

The Russian manufacturing PMI dropped 0.4 points to a 4-month low of 48.3, with both orders and output contracting.  Turkey’s 50.1 PMI conveyed stagnation after 49.0 in June and 50.2 in May.

Australia purchasing managers index in manufacturing rebounded 6.2 points to 50.4 following June’s shock score of 44.2, but it still lay below May’s 52.3 reading.

U.S. personal income and spending rose 0.4% and 0.2%, respectively, on month in June.  Real personal expenditures were unchanged, and the 12-month changes on the PCE and core PCE price deflators put U.S. inflation at 0.3% and 1.3%, a tenth of a percentage point above street expectations but still very subdued.

U.S. construction spending only firmed 0.1% in June, well shy of expectations.

Canada is closed for the August Civic holiday.

Japanese motor vehicle sales were 1.3% lower than a year earlier in July, turning around June’s 5.4% on-year advance.  U.S. motor vehicle sales will be learned later today.

In the year to July, Thai consumer and producer prices dropped by 1.1% and 3.8%.  Indonesian consumer prices increased 7.26%, and Turkey’s CPI and PPI went up 6.8% and 5.6%.

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

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