Archives of “Surveys” tag

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Japan preliminary PMIs (May): Manufacturing 38.4 (prior 41.9) & Services 25.3 (prior 21.5)

  
Analysis, Economy
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Jibun Bank / Markit preliminary PMIs for May

Manufacturing 38.4
  • prior 41.9
Services 25.3
  • prior 21.5
Composite 27.4
  • prior 25.8
Joe Hayes, Economist at IHS Markit:
  • “Latest PMI data provide yet another shocking insight into the devastating impact of the COVID-19 outbreak. While the rate of decline in services activity has eased very slightly, plummeting demand for goods is finally catching up with the manufacturing sector, which posted an accelerated decline in production during May. 
  • “Taking the April and May PMI surveys together, we see that both are indicative of GDP falling at an annual rate in excess of 10%. It is clear that the economy is going to contract for a third successive quarter, with the hit to Q2 likely to be potentially as large as 20% on the previous year. 
  • “Nevertheless, the dynamics in the economy are clearly evolving. As Japan eases the state of emergency measures, the services economy can begin its gradual recovery. However, the damage to the manufacturing sector could continue to worsen as global trade conditions deteriorate and the global economic recovery is slow.” 

Eurozone April final services PMI 12.0 vs 11.7 prelim

  
Analysis, Economy
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Latest data released by Markit – 6 May 2020

  • Composite PMI 13.6 vs 13.5 prelim
The preliminary release can be found here. A tad better than initial estimates but again, it doesn’t take away the fact that the euro area economy saw a record contraction in business activity during the month of April. A summary to wrap your head around:
Markit notes that:

“The extent of the euro area economic downturn was laid bare by record downturns in every country surveyed in April, with output falling at unprecedented rates across the region’s manufacturing and services sectors.

“With a large part of the region’s economy shut down while COVID-19 infections spiked higher, the economic data for April were inevitably going to be bad, but the scale of the decline is still shocking. The survey data are indicative of GDP falling at a quarterly rate of around 7.5%, far surpassing the worst decline seen in the global financial crisis. Jobs are also being lost at a rate never previously seen.

“Hopefully, with coronavirus curves flattening and governments making moves to ease lockdown restrictions, many sectors should start to see output and demand pick up. The process will be only very gradual, however, as governments juggle between reviving economies and preventing a second wave of infections. Most companies will inevitably need to work at levels well below full capacity and sectors such as retail, travel, tourism and recreation – already the hardest hit – will continue to be badly affected by social distancing.

“While the rate of decline may ease in coming months, we do not expect to see any material signs of recovery until the second half of the year, and it is likely to be several years before the output lost due to the 

Japan November Reuters Tankan survey -9 vs -5 prior

  
Analysis, Economy
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Soft manufacturing survey data

Reuters tankan
  • Prior was -5
  • Weakest since March 2013
  • Non-manufacturing index +12 vs +25 prior
  • Non-manufacturing index hits lowest since Oct 2016
  • 3 month future forecast shows manufacturers index at -3 and non-manufacturers at +10
The typhoon at the start of the month along with the consumption tax hike hammered this survey, particularly on the non-manufacturing side.
Digging into the numbers the retail index fell to -15 from +30 in a troubling drop.
The BOJ has argued that solid domestic demand would offset external weakness but that’s not the way it appears to unfolding.
Pressure is growing for fresh government and/or central bank stimulus.

Currencies in focus after weak PMI’s

  
Analysis, Forex
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Quick look as PMI impact settles

The weak PMI data was not a surprise, but the flow through into service data is confirmation of the feared inevitable, hence the weakness we see in the EUR/USD, German Bonds rising and European equities down. Dax now increasing its losses and at -1.48%.
So, the strongest currencies include the JPY and CHF (on risk aversion) with the EURO and the GBP the weakest on the session. Watch out for further risk souring.
Quick look as PMI impact settles
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