Service Sector Purchasing Manager Surveys and Some Central Banking Developments
April 5, 2023
The dollar overnight traded 0.6% higher against the Australian dollar, 0.5% lower versus the Japanese yen, and held steady on balance against the euro and Canadian dollar.
Equities closed down 1.7% and 0.7% in Japan and Hong Kong and up 0.8% and 0.6% in India and South Korea. In Europe, the German Dax is down 0.6%, while the Ftse has risen 0.4%.
The ten-year Japanese JGB yield has risen 7 basis point. In contrast, ten-year U.S. and German sovereign debt yields are four basis points lower.
At $2,048 per ounce, the price of gold is up 0.5% and closing in on its all time peak of $2069.4 touched in 2000. The price of a bitcoin token is 1.2% stronger. Oil remains more expensive than $80 per barrel.
Wednesday has been a crowded day from a data release standpoint.
Service sector purchasing managers indices for March printed at a 16-month high of 59.4 in Spain, an 11-month high of 55.7 in Italy, a 31-month high of 58.1 in Russia, a 2-month low of 57.8 in India, a 2-month low of 52.9 in Great Britain, a 2-month low of 48.6 in Australia, a 10-month high of 53.7 in Germany, a 9-month high of 53.9 in France, a 2-month low of 55.7 in Ireland, a 2-month high of 48.6 in Sweden, a 5-month high of 51.8 in Brazil, and a 10-month high of 53.7 in Euroland, prompting analysts at S&P Global, who compile the index, to conclude that the risk of recession at least for now has been averted.
The U.S. S&P Global services PMI jumped two index points to a 9-month high of 52.6.
Among other sectoral PMI surveys reported today, the non-oil U.A.E. index improved to a 5-month high of 55.9. South Africa’s PMI slid back under the 50 no change level to a 2-month low of 49.7. Lebanon’s private PMI rose to a 7-month high of 49.7, and Singapore’s private PMI climbed to a 4-month high of 52.6.
German industrial orders rebounded much more strongly than anticipated in February, leaping 4.8% on month (the largest such increase in 21 months) and slashing the 12-month rate of decline to 5.7% from 12.6% in the prior month.
Italian retail sales dipped 0.1% in February but were still 5.8% greater than a year earlier.
Several economies released industrial production figures from February. French IP rose 1.2% on month but little more (1.3%) year on year. Spanish IP increased 0.6% versus January but posted a 0.4% on-year slide. Danish and Norwegian output were respectively 18.6% higher and 6.0% lower than a year earlier.
Consumer confidence in March softened to a 4-month low but still optimistic level in Spain and a 2-month low in Mexico that was in pessimistic territory.
The ADP estimated rise of U.S. private sector jobs last month cooled substantially to 145k and was accompanied by a deceleration of wage inflation.
The U.S. goods and services trade deficit of $139.2 billion in January-February was 20% narrower than a year earlier. Canada’s trade surplus of C$ 422 million in February was just 35% as large at January’s surplus and embodied monthly drops in both exports and imports, a sign of slower growth.
Officials at the Reserve Bank of New Zealand had been expected to leave policy steady but instead raised the Official Cash Rate by another 50 basis points to a 171-month high of 5.25%. This was the second half percentage point tightening of 2023 and follows 350 basis points of increase during 2022 and 50-bp hike in October 2021. From March 202o until then the OCR had been only 0.25%. A released statement justifying today’s additional tightening calls inflation persistent and excessive and recent employment unsustainable. Officials also state that New Zealand’s financial system is well-positioned to handle an appropriately restrictive monetary policy stance.
Central bank authorities in Chile and Poland left their key interest rates unchanged at 11.25% and 6.75%, respectfully, after scheduled policy reviews. The Chilean rate is its highest since late 1998 and was last changed in a half year ago. In the pandemic until mid-2021, the rate had been as low as 0.5%. The National Bank of Poland’s interest rate benchmark had been even lower early in the pandemic at 0.10% but, at 6.75% since last September, is its most elevated since 2003.
Copyright 2023, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Central Bank of Chile, French and Spanish industrial production., German factory orders, National Bank of Poland, service sector PMI surveys, U.S. and Canadian trade balances
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