Holiday Closures and Manufacturing Purchasing Manager Indices to Start the Week

May 2, 2022

For a variety of reasons, many countries are observing holiday this Monday. It’s the early spring banking holiday in Great Britain. Islamic countries like Saudi Arabia, the UAE, and Kuwait are celebrating Eid-al-Fitr. China, Hong Kong, and Taiwan are shut for Labor Day.

Among stock markets that are open for business this Monday, Australia and New Zealand closed down 1.2% and 0.8%. Indian, South Korean and Japanese share prices closed down only marginally. Bigger drops have occurred so far in France (1-1.4%), Italy (-0.9%), Switzerland (-0.7%) and Germany (-0.6%). U.S. stock futures have lost around 0.4% following last week’s bloodbath.

The DXY weighted dollar index climbed 0.4% and is just 0.5% below last week’s mult-year peak.

Ten-year U.S. Treasury, German bund and Japanese JGB yields are respectively down two basis points, down 3 bps and up a basis point. Commodity prices have softened. WTI oil is 3.0% weaker, and gold has dropped 1.7%.

Many April manufacturing purchasing managers surveys were published today.

The Euroland PMI reading of 55.5 was 0.2 points higher than its preliminary April estimate but nonetheless at its lowest level since January 2021. Production grew only barely and at its weakest pace in 21 months. The orders sub-index fell to a 22-month low. while continuing supply delays and soaring energy costs lifted inflation to a record high.

Within the euro area, the PMIs that have been released range from a 14-month low of 53.3 in Spain to a 2-month high of 59.9 in the Netherlands. In between, The German, Italian and Austrian manufacturing indices printed at 20-, 16- and 15-month lows, while the French PMI rose 1.0 point to a 2-month high. China’s restriction-imposed slowdown and the war in Ukraine suggest that conditions will get worse before they get better.

Among other European PMIs reported today,

  • Switzerland‘s index dropped 1.5 points to a 14-month low of 62.5.
  • Sweden’s PMI of 55.0 was 1.3 points lower than in March and at a 20-month low.
  • In Norway, an energy producer, the PMI rose 0.9 point and, at 60.6, exceeded the 60 threshold for the first time since November.
  • Denmark’s and Hungary’s readings of 63.0 and 58.9 constituted a 4-month highs.
  • The Czech PMI slipped 0.3 points further to a 17-month low of 54.4.
  • Poland‘s 52.4 score was its lowest in 15 months.

Chinese PMIs were reported over the weekend. The privately compiled manufacturing index sank 2.1 points and for a second month was below the 50 level that divides expanding from contracting business conditions. At 46.0, such was its lowest in 26 months. Government-authorized manufacturing and non-manufacturing PMIs both fell to 26-month lows as well of 47.4 and 41.9.

Elsewhere in Asia, reported PMI readings today for April included

  • A 53-month Filipino high of 54.3.
  • A 2-month Japanese PMI low of 53.4 that embodied a 22-month business outlook low.
  • A 2-month low in Taiwan‘s PMI of 51.7.
  • A 1.1-point rebound of South Korea‘s PMI from March’s 4-month low to 52.1.

Australia‘s IHS-compiled manufacturing PMI climbed 1.1 points to an 11-month high of 58.8 but also revealed record high inflation. The AIG-compiled Australian manufacturing told a similar story, rising 2.8 index points to a 9-month high of 58.5.

Among other data highlights revealed today, German retail sales experienced a fourth straight disappointing month, dipping 0.1% in March after a 0.2% uptick in February, a 0.3% downtick in January and a 2.2% dive in December. On-year growth in retail sales of negative 2.7% contrasted with February’s 6.7% 12-month rate of increase and was the largest year-on-year decline in 14 months.

Japanese consumer confidence only recovered 0.2 points to a 2-month high of 33.0 in April from its 14-month low touched in March.

Swiss consumer confidence plunged this quarter to a reading of minus 18.5 — its weakest since the first quarter of 2021 — from readings of 3.2 in 1Q 2022, 8.3 in 4Q 2021 and 9.6 in 3Q 2021.

Euroland’s economic sentiment index fell more sharply than forecast in April, dropping 1.7 points to a 14-month low of 105.0. Such had crested last July at 119.8. The industrial sector (a 13-month low) took a heavier hit than the services sector (a 2-month low) but each area was weaker than analyst forecasts. Also, consumer confidence got revised down 5.1 points from its preliminary reading to a two-year low of -22.0. This release also included an 8-month low in construction sector sentiment and a 9-month low in labor market conditions.

Peruvian consumer price inflation accelerated 1.1 percentage points to a 287-month high of 8.0% in April, and Pakistani CPI inflation of 13.4% in April was the most in 159 months.

Saudi Arabian GDP, which rose 3.2% on average in 2021, posted a 9.6% year-on-year advance in the first quarter of 2022.

This week’s most awaited economic event will be the FOMC announcement and press conference on Wednesday, where a 50-basis point rate hike is expected along with very hawkish forward guidance regarding what to expected in monetary policy the rest of this year. Monetary policies are also being reviewed this week in the U.K. and Australia. Japanese markets will be shut Tuesday through Thursday for Golden Week holidays.

Copyright 2022, Larry Greenberg. All rights reserved. No secondary distribution without express permission.


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