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ISM non-manufacturing index 56.1 vs 58.0 expected

ISM non-manufacturing report

ISM non-manufacturing report
  • Prior was 59.7
  • Lowest since August 2017
  • Prices paid 58.7 vs 54.4
  • New orders 59.0 vs 65.2 prior
  • Employment 55.9 vs 55.2 prior
  • Business activity 57.4 vs 64.7
  • New export orders 52.5 vs 55.0 prior
  • IMports 51.5 vs 48.5 prior
  • Full report
That new orders drop is concerning. The index is still at a very healthy level but the drop is a concern.
Comments in the report:
  • “Labor is tight and in short supply.” (Accommodation & Food Services)
  • “While we have a slowed down in residential service and install [area], we are still experiencing strength in the new commercial construction area.” (Construction)
  • “Q1 revenue in total on plan or slightly above. Some products slightly below plan. Overall, good start to 2019.” (Finance & Insurance)
  • “Supply expenses are up commensurately with business conditions as business activity has outpaced the budget on average four to six percent for our fiscal cycle that [began] 7/1/18.” (Health Care & Social Assistance)
  • “There is a sense of relief in our industry with the temporary reprieve of the additional tariffs. As of now, we feel this will help us maintain competitive prices and steady margins over the next quarter.” (Management of Companies & Support Services)
  • “Activity level held flat.” (Mining)
  • “Initial surge in business at the beginning of the year has peaked and settled to a more stable level.” (Professional, Scientific & Technical Services)
  • “Locally as construction grows, a shortage of available workers for the industry is occurring for future projects.” (Public Administration)
  • “April is when our real busy season begins and it has arrived early this year, demand is quite strong.” (Real Estate, Rental & Leasing)
  • “Labor, weather and regulatory issues have impacted operations.” (Transportation & Warehousing)

Eurozone February retail sales +0.4 vs +0.3% m/m expected

Latest data released by Eurostat – 3 April 2019

  • Prior +1.3%; revised to +0.9%
  • Retail sales +2.8% vs +2.3% y/y expected
  • Prior +2.2%
A beat on the headlines but the shine on that is taken off by the negative revision to January’s report. Nonetheless, the release here provides a general gauge of consumption activity in the region and the data beat here will at least provide some minor relief – if anything else – that Q1 economic activity isn’t all bad.
EUR/USD sits higher still at 1.1242 currently while EUR/JPY is also near the highs for the day at 125.40 as the dollar and yen remains weak on more upbeat risk tones.

UK March services PMI 48.9 vs 50.9 expected

Latest data released by Markit/CIPS – 3 April 2019

  • Prior 51.3
  • Composite PMI 50.0 vs 51.1 expected
  • Prior 51.5
That’s a notable miss on the services sector reading and drags the composite reading to basically flat levels for March. Markit notes that this points to UK GDP stagnating in Q1 with economic activity even contracting in March.
For some context, that’s the lowest print in services since July 2016; similar for the composite print as well. But once again, it highlights the sort of drag that Brexit uncertainty is having on the UK economy.
Cable dips a little on the data, falling to 1.3150 levels from around 1.3170 earlier but still remains relatively buoyant on Brexit developments.

Eurozone March final services PMI 53.3 vs 52.7 prelim

Latest data released by Markit – 3 April 2019

  • Composite PMI 51.6 vs 51.3 prelim
Preliminary figures can be found here. A slight uptick in both final prints here, owing much to the bounce seen in Italy and Spain as well as the upward revision in France. Nothing much else to gather from the release here as the overall composite reading is still rather soft in the bigger picture.
Let’s see if the green shoots in March can lead to anything better down the road for the region or if economic conditions will continue to slow further.

ADB warn developing Asia could slow for a second straight year in 2019

Asian Development Bank latest with specific concerns on economic risks from China – US trade tension and potentially disorderly Brexit.

Developing Asia (45 countries in the Asia-Pacific region) expected to grow 5.7% in 2019
from projected 5.9 %in 2018 & 6.2% in 2017
2020 forecast 5.6%, slowest since 2001
Both Bloomberg and Reuters have run downs on the ADB’s Asian Development Outlook report if you’d like more.
Note this:
  • Exchange rate volatility can be problematic, particularly for nations that rely on dollar debt. 
We’ve seen this already.

Chinese PMI data : Chinese stimulus working

Good signs for global growth from China’s PMI data

Shanghai

Sunday’s overnight session saw both the official Chinese PMI and the Caixin measure return to expansion in March confirming that the stimulus program is capable of boosting the Chinese slowdown. This return to expansion will also settle nerves around the Global outlook which was sparked by the weak PMI data out of Germany and the US last month. Incidentallythat weak reading of 44.7 was revised down further to 44.1 on April 1. Also, Justin reported on Germany’s engineering sector halving their output in 2019. See here for the details.

The MSCI Asia pacific index showed a 25% increase in the 18 months after the last time official PMI data rose back above 50 in 2016. Look at the chart below for the connection between the Chinese PMI data and the MSCI Assia Pacific Index.

Good signs for global growth from China's PMI data

All we need know is Brexit to be sorted, German manufacturing to pick up and Trump and Xi to sign a great deal. To coin a New Zealand phrase, ‘What are the chances?’

(more…)

Brexit – UK parliament votes to reject everything (again)

Brexit votes, the House of Commons have once again said no to all alternatives

GBP trashed
If no agreement can be reach the default is a no deal exit.
  • The government says they want to leave with a deal
  • The parliament says they want to leave with a deal
And yet, this malarkey continues with no compromise being able to be reached.
The 4 failed options (ICYMI)
  • Permanent customs union with EU- Failed y273 vs n276
  • Common Market 2.0 deal – Failed y261 vs n282
  • Second referendum – Failed y280 vs. n292
  • Revoke Article 50 – Failed y191 vs n 292
DUP voted against all four.
I’ve said it before, I’ll say it again. Get the Spice Girls in, they know what they want, what they really, really want. Much better than the current rabble in the Commons