The AiG Performance of Manufacturing Index for December shows that the Australian economy’s manufacturing sector unexpectedly expanded for the first time in six months. The index printed 50.2 versus 47.8 prior and the highest since June’s 52.9 and that pushed the AUD and equities higher. Later today we have several PMIs from European countries and to round it all off we have the ISM Manufacturing release from the US and the Iowa caucuses where Romney, Paul and Santorum are the current frontrunners.
ISM Manufacturing to show continued expansion: The world’s largest economy ended 2011 on a high note according to consensus as the ISM Manufacturing Index is seen increasing to 53.4 from 52.7 previously. Despite contagion risks from the Eurozone’s sovereign debt crisis the US economy has so far proved resilient with ISM Manufacturing declining to a low of 50.6 in August 2011 before reaccelerating somewhat.
Regional PMIs have improved as well after sharp declines in August and September with the Chicago PMI the last to beat expectations at 62.5 versus 61 expected and 62.6 prior. The surge in regional PMIs point to upside potential, but they are much more volatile on a month-to-month basis – as indeed August and September can attest to.
German unemployment situation to improve further? Before the US numbers we have German unemployment figures, which are expected to show another positive month. November’s surprise decline of 20,000 in the number of unemployed in Germany (vs. -5,000 expected) is estimated by consensus to continue in December with another drop of 10,000 though the unemployment rate is bound to stay unchanged at 6.9 percent.
Mads Koefoed
SAXO BANK