News
BG: Neutral – Cumulative budget deficit flat at 1.0% of GDP in August, Minfin sells 10?Y bonds at 5.28% (p2)
CZ: Mixed – September manufacturing PMI slips to 52.3 (p2)
RO: Neutral – MinFin places yesterday RON 297mn in 6M t-bills: yield at 6.69%, bid / cover ratio 2.42 (p2)
Today’s Events
CR: August Retail trade (prelim), HRK 450mn and EUR 30mn t-bill auctions / HU: HUF 30bn t-bill auction / PL: MPC meeting / RO: August PPI, August Retail sales / SRB: RSD 10bn t-bill auction / RU: September CPI
EEMEA Markets
September PMI data suggest that economic activity in the region is holding up relatively well given the ‘risk off’ tone globally in markets. Hungary, Turkey and Russia all showed gains in their manufacturing PMI indices in September while Poland and the Czech Republic slipped. All indices stand either at or above 50. To the extent that Turkey and Hungary were the only two countries to see export orders accelerate in September, there are some signs of weakening external demand here. Turkey was the only country to see an increase in the output component of the index, bringing it back above 50. For all other countries, however, the output index remains above 50. The employment component of the index showed some modest signs of slippage across all countries but again remains above 50. Turkey is the exception where the employment index showed gains to bring it back above 50.
Examining new orders less the stock of finished goods and comparing it to output, bodes well for output in Turkey, the Czech Republic and Russia but less so in Hungary and Poland. Once again a mixed but not outright negative message on the whole. For example in Russia, the manufacturing sector ran down its stock of finished goods much more than the decline in orders would suggest is necessary. In Turkey new orders increased while the stock of finished goods declined.
Newsflow in terms of the price components was mixed but most showed continued decline. In Russia and the Czech Republic both input and output prices eased. In Turkey and Poland it was more mixed with only one of the two indices declining. Over a multi-month horizon, price pressures have eased significantly across the region.
Examining 3Q performance as a whole, the PMI data are far from stellar but are in line with modest gains in economic activity across the region, as we have pencilled into our forecasts. All 5 countries showed declines relative to 2Q to bring indices towards end-09/early-10 levels but still well above where we stood in the midst of 4Q08/1Q09. Turkey is the exception where the PMI on average last quarter stood at its lowest since 2Q09 but Turkey was the first country to show recovery at that time.
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http://www.easyforexnews.net/wp-content/uploads/2011/10/eed_fi_041011_0000.pdf
Gillian Edgeworth
UniCredit Research