03 February 2012 at 5:50 GMT
Today it was the turn of the non-manufacturing category of PMI indices to grab the attention – and headlines seemed not quite so rosy as the manufacturing side.
The official services PMI slid to 52.9 in January from 56.0 with a weak construction sector knocking the wind out of buoyant New Year-related retail sales and transportation. The privately conducted HSBC survey was unchanged from the previous month with a 52.5 print. We still feel that it is prudent to wait for March data to gauge the true state of the economy once the holiday distortions are out of the equation. The data lent slight negativity to trading at the margin though ranges still remained tight throughout the session.
Following on from Wednesday’s improvement in the UK manufacturing PMI (up to 52.1 from 49.7, highest since May), January’s Lloyds business barometer also showed improvement “rising” to -11 from -23 (the first rally in 4 months) and, perhaps more encouragingly, the index for business activity in the next 12 months rebounded to +33 from +17, also its highest since October. If we get confirmation of a former services PMI reading tonight, then the “green shoots” mentioned in
Nick Beecroft's post may be more evident.
Overnight there seemed to be a lack of headlines concerning the Greek PSI negotiations which are supposed to be nearing an agreement and announcement (we were “promised” one by the end of the week!). The EU's Juncker was also on the wires complaining that the measures taken at the January 30 summit on fiscal discipline were “largely insufficient” and we saw slight negativity into the US data releases. Even comments from China’s Premier Wen that Beijing was considering greater involvement in the EFSF/ESM funds via the IMF to help stabilise Europe was unable to have much impact.
Federal Reserve Chairman Bernanke’s testimony before the House Budget Committee was little changed from the last FOMC statement, noting that the recovery was frustratingly slow, vulnerable to shocks and the outlook remained uncertain. He also noted improved job market conditions as a positive, and said that the factors restraining business capital spending may be abating.
On the data front, weekly jobless claims showed further improvement to 367k from a revised 379k (371k consensus) with continuing claims at 3437k hitting a new low for the cycle. The good news was further heightened by New York’s ISM rising to 60.1 from 51.7 (8-month high) and the weekly Bloomberg consumer comfort index edging up to -44.8 from -46.4.
Asia was certainly on hold ahead of today's US non-farm payroll report and Europe is likely to adopt a wait-and-see attitude. We also wait for announcements from the Greek PSI not forgetting the EU summit on the latest Greek bailout on Monday.
Data Highlights
- US Jan. Challenger Job Cuts out at +38.9% y/y vs. +30.6% prior
- US Feb. RBC Consumer Outlook Index out at 45.1 vs. 45.8 prior
- US Q4 Non-farm Productivity out at +0.7% q/q vs. 0.8% expected and revised 1.9% prior
- US Initial Jobless Claims out at 367k vs. 371k expected and revised 379k prior
- US Continuing Claims out at 3437k vs. 3535k expected and revised 3567k prior
- US Jan. ISM – New York out at 60.1 vs. revised 51.7 prior
- US Bloomberg Consumer Comfort Index out at -44.8 vs. -45.0 expected and -46.4 prior
- AU Jan. AiG Performance of Service Index out at 51.9 vs. 49.0 prior
- UK Jan. Lloyds Business Barometer out at -11 vs. -23 prior
- China Jan. Mon-manufacturing PMI out at 52.9 vs. 56.0 prior
- China Jan. HSBC Services PMI out at 52.5, unchanged from prior
Upcoming Economic Calendar Highlights
(All Times GMT)
- GE PMI Services (0855)
- EU PMI Services (0900)
- UK PMI Services (0930)
- EU Euro-zone Retail Sales (1000)
- CA Unemployment Rate (1200)
- CA Net Change in Employment (1200)
- US Change in Non-farm Payrolls (1330)
- US Unemployment Rate (1330)
- US ISM Non-manufacturing (1500)
- US factory Orders (1500)