Service Sector PMI Surveys and U.S. Jobs Data

August 3, 2018

The U.S. Labor Department’s July jobs and wage data will be released shortly.

Investors are already digesting PMI data reported overnight.

  • Euroland’s composite purchasing managers survey (comprising both manufacturing and service sector activities) dropped back to a 2-month low of 54.3 in July from a 4-month high in June of 54.9. The services PMI had the second lowest reading in a year and a half.
  • The composite PMI of Germany was at a 4-month high, but those of Spain (a 56-month low), Ireland (a 4-month low) and France and Italy (2-month lows) all showed weaker growth in July than June.
  • Russia’s composite PMI of 51.7 was at a 26-month low.
  • Britain’s service sector PMI fell 1.6 points to a 3-month low of 53.5.
  • A slide in China’s services PMI to a 4-month low of 52.8 was the main factor behind its 2-month composite PMI low of 52.3 in July.
  • South Africa’s private purchasing managers index crossed below the 50 level that separates expansion from contraction, printing at 49.3, a 6-month low.
  • Australia’s AIG Performance of Services index slumped sharply to a 7-month low.
  • Sweden’s 59.1 PMI services reading remained elevated, albeit 0.7 points under its June level.
  • India’s services PMI (54.2) and composite PMI of 54.1 each signaled the fastest rise of activity since October 2016.
  • But Lebanon’s private PMI moved further below 50 and at 45.4 indicated the fastest rate of contraction since October 2016.
  • Japan’s composite (51.8) and services (51.3) PMI scores constituted 2-month lows.
  • Hong Kong’s private PMI reading of 48.2 was a 3-month high.
  • Singapore’s private PMI slid to a 7-month low of 53.0.

Retail sales volume in the euro area rose 0.3% in June but recorded a slower 12-month 1.2% rate of increase.

Swiss consumer prices fell 0.2% in July after holding unchanged in June. Despite the monthly dip, on-year inflation of 1.2% was the most since April 2010.

Turkish CPI inflation of 15.85% in July was 0.5 percentage points higher than in June and the most since January 2004. The lira’s slide and the belated response of the country’s monetary authorities to such have hammered Turkish financial markets. Producer prices were 17.4% higher in July than a year earlier.

South Korea’s current account surplus of $7.38 billion in June was slightly wider than a year earlier, but the first-half surplus of 29.65 billion was down from $35.65 billion in the first half of 2017.

The Central Bank of Sri Lanka retained unchanged key deposit and lending rates of 7.25% and 8.50%, respectively. The lending rate had been cut 25 basis points in April, but the deposit rate has been unchanged since an increase in July 2016. A released statement predicted inflation in the mid-single digits and called the present monetary policy stance “appropriate.”

The Bank of Mexico likewise left monetary policy unchanged. See review.

Australian retail sales rose in each month of 2Q18, climbing 0.4% on month in both May and June and by 0.5% in April. June sales were 3.1% greater than a year earlier.

Italian industrial production and retail sales posted June-over-June increases of 1.7% and 1.5%. Spanish consumer confidence fell marginally to a 2-month low in July.

Besides the jobs data, U.S. trade figures get released today as do Canadian trade statistics.

Just prior to the 08:30 release, the dollar shows overnight losses of 0.2% against the loonie, euro, Swiss franc, yuan and sterling as well as a 0.5% drop versus the Aussie dollar.

Stocks rose in Europe but were mixed in the Pacific Rim. Ten-year sovereign debt yields dipped a basis point in the U.S., U.K. and Japan and by 2 bps in Germany.

Copyright 2018, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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