The start of a new month brought the usual flurry of PMI releases for January across Asia – and generally they surprised to the upside.
First off, Australia’s performance of manufacturing index rose to a six-month high of 51.6, increasing for the second month in a row. The employment sub-index rose 5 points to 51.0, supplier deliveries increased to 55.6 and inventories rose to 54.3 but the new orders sub-index was flat at 49.9. Nevertheless, an encouraging start to the year though and respondents did highlight global uncertainty and the AUD’s strength affecting competitiveness as factors to bear in mind going forward.
The same positive mood came out of China with its manufacturing PMI reading putting in another uptick in January, rising to 50.5 from 50.3 with the expectations centred around 49.6. The performance was even more astounding with the timing of the Lunar New Year break which was expected to claw back some of December’s gains. The new orders sub-index rose to 50.4 from 49.8 though sub-indices for export orders, imports and employment contracted further. The separate PMI reading from HSBC was not quite so bullish with a 48.8 reading from 48.7 and bang in line with the flash estimate released on January 20.
Risk currencies were bid higher in the aftermath of the Chinese data but the strength did not last long. We spent the rest of the session trading in the lower half of the day’s range. The strength of the report is perhaps questioning whether further easing will come from the People’s Bank of China but we will likely need to wait until February’s data to get a truer, non-holiday affected reading of the economy.
Overnight we saw a brief risk rally fade as US data turned in a weak performance. The USD index halted its slide and ended mildly positive sending the EUR and commodity FXers lower. S&P CaseShiller house prices fell more than expected while consumer confidence as measured by the US Conference Board bucked its recent two-month trend with a dip to 61.1. Chicago PMI was also a disappointment with a slump to 60.2 from 62.2, its first decline in three months. Job-related components for both the PMI and confidence indicators were weaker perhaps giving an inkling ahead of Friday’s NFP report.
Data Highlights
US Q4 Employment Cost Index out at +0.4% q/q, as expected, vs. +0.3% prior
CA Nov. GDP out at -0.1% m/m, +2.0% y/y vs. 0.2%/2.3% expected and flat/2.7% prior resp.
US Nov. S&P CaseShiller House Prices out at -0.7% m/m vs. -0.5% expected and revised -0.67% prior
US Jan. Chicago PMI out at 60.2 vs. 63.0 expected and 62.2 prior
US Jan. Consumer Confidence out at 61.1 vs. 68.0 expected and revised 64.8 prior
AU Jan. AiG Performance of Manufacturing out at 51.6 vs. 50.2 prior
AU Dec. HIA New Home Sales out at -4.9% m/m vs. revised +4.4% prior
AU Q4 House Price Index out at -1.0% q/q, -4.8% y/y vs. -0.6%/-3.3% expected and revised -1.9%/-3.4% prior resp.
China Jan. PMI Manufacturing out at 50.5 vs. 49.6 expected and 50.3 prior
China Jan. HSBC PMI Manufacturing out at 48.8 vs. 48.7 prior
Upcoming Economic Calendar Highlights
(All Times GMT)
UK Nationwide House Prices (0700)
Sweden Swedbank PMI Survey (0730)
Norway PMI (0800)
Swiss Retail Sales (0815)
Swiss PMI Manufacturing (0830)
GE PMI Manufacturing (0855)
Norway Unemployment Rate (0900)
EU PMI Manufacturing (0900)
UK PMI Manufacturing (0930)
EU Euro-zone CPI Estimate (1000)
US MBA Mortgage Applications (1200)
US NAPM-Milwaukee (1300)
US ADP Employment Change (1315)
US Fed’s Plosser to speak (1330)
SI PMI (1330)
US Construction Spending (1500)
US ISM Manufacturing (1500)
US ISM Prices Paid (1500)
EU ECB’s Weidmann to speak (1620)
US Fed’s Bertsch to testify (1900)
Andrew Robinson,
SAXO BANK