July’s Flash Japanese and Euro Area PMI Readings Below June Scores

July 24, 2017

The dollar began the new week trading up 0.2% against the euro and peso and edging 0.1% higher vrsus the Swissy and kiwi, but the greenback also depreciated 0.5% relative to the Australian dollar and 0.2% against the yuan, yen, loonie and sterling.

U.S. stocks opened slightly lower. The Nikkei lost 0.6%. So did Australia’s market, but in other Pacific Basin markets equities went up 0.7% in India, 0.6% in Hong Kong and Indonesia, and 0.4% in China. Turning to Europe, stocks are mixed, with losses of 1.0% in the U.K., 0.3% in Germany and 0.2% in Switzerland but gains of 0.4% in France and Spain and 0.7% in Italy.

West Texas Intermediate crude oil advanced 0.8% in $46.15 per barrel. A meeting between a selection of OPEC and non-OPEC producers is taking place today in St. Petersburg, Russia. Gold edged 0.1% higher to $1,261.90 per ounce, and industrial metal prices strengthened.

Among 10-year sovereign debt yields, British gilts and Japanese JGBs are steady, but German bunds are off a basis point. The French yield also dipped a basis point today, while Italy’s yield is down two bps.

Euroland’s composite PMI declined to a 6-month low of 55.8 in July. Manufacturing at 56.8 was at a 3-month low, and services (55.4) matched June’s five-month low. These preliminary results for July suggest the real GDP is likely to expand at a decent 0.6% pace this quarter assuming the levels hold up for the rest of the period. This would be down from growth around 0,.7% in the second quarter. The slowdown appears to reflect supply line bottlenecks rather than a tipping point or relapse that is likely to endure.

  • Germany’s composite purchasing managers index printed at a 6-month low of 55.1 in July, down from 56.4 in June, 57.4 in May and 57.6 in April.
  • France’s composite PMI also slipped to a 6-month low (55.7).

Japan’s flash manufacturing PMI sank to an 8-month low of 52.2 in July from 52.4 in June. Production growth was at a 10-month trough.

Markit Economics also reported preliminary U.S. July PMI results today. The composite score was at a 6-month high, and services matched June’s 5-month peak. Manufacturing rose to a 4-month high.

The Conference Board’s June indices of leading economic indicators are out for China and the euro area. China’s LEI advanced 1.6% on month, almost as much as May’s 1.7% increase, and the index of coincident Chinese economic indicators gained 2.0%, their best month-on-month performance in the first half of 2017. In Euroland, the LEI went up 0.6%, the fourth good-sized monthly rise in a row, but the index of coincident economic indicators edged up just 0.1%.

U.S. existing home sales slipped 1.8% in May to 5.52 million at an annual rate. That level was 0.7% greater than in May 2016 and the second best monthly total of this year.

Japanese supermarket sales recorded a second straight on-year decline in June, this time of 1.2%. April was the only month in the first half in which supermarket sales surpassed their year-earlier total.

Japan’s leading and lagging economic indicators for May were revised marginally lower, while the index of coincident economic indicators was revised upward and continues to follow an improving trend.

Canadian wholesale turnover in May rose 0.9% on month and 10.1% on year.

Price news released today again accentuated global disinflation.

  • Icelandic wage cost inflation slowed to 7.3% in June from 7.8% in May.
  • CPI inflation in Singapore fell to 0.5% in June from 1.4% in May.
  • Finnish PPI inflation slowed to 3.2% in June from 4.1%.

On the U.S. political front, the president’s son-and-law now admits to having attended four meetings with the Russians during and after the campaign but termed such unremarkable and denies any collusion.

Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.


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