Another Sign of Cooler U.S. Growth, Which Isn’t an Entirely Unwelcome Thing – Currency Thoughts
Another Sign of Cooler U.S. Growth, Which Isn’t an Entirely Unwelcome Thing
June 5, 2024
ADP’s monthly calculation of U.S. private-sector employment growth rose by a less-than-anticipated 152k last month. That constitutes the smallest gain since +111k in January.
Composite and service-sector purchasing manager readings for the euro area in May of 52.2 (a one-year high) and 53.2 (a 3-month low but the fourth straight score above 50) appear to confirm that Euroland has moved past its recession, aided by disinflation.
Stock markets are up 1.2% in Germany and France. Yesterday’s drop in India’s Sensex equity index following Modi’s smaller-than-anticipated reelection margin of victory was short-lived, as the index rebounded 3.2% today.
Ten-year sovereign debt yields have slipped by two basis points today in both Germany and Japan.
The dollar has risen 0.8% today against the yen but has been steady in its other major relationships.
Oil, gold, and Bitcoin prices are respectively up 0.5%, 0.6% and 0.7% today.
Major U.S. stock market indices, especially the Nasdaq, opened in the black.
Producer prices in the euro area dropped by a greater-than-anticipated 1.0% in April and resulted in a 5.7% year-on-year rate of decline. Producer price inflation also remained negative (minus 1.0%) when excluding the volatile energy component.
The National Bank of Poland’s 5.75% policy interest rate was not cut further, confirming what investors were expecting. Polish CPI inflation in May was sitting right on the central bank’s target of 2.5% and down from 18.4% in March 2023. However, officials are being cautious because of concerns about possible future food, energy, and wage pressures. The peak of 6.75% had been maintained for 12 months through last September but then cut by 75 basis points and another quarter percentage point in the ensuing October meeting.
Within Euroland, France’s May composite and service sector PMI readings of 48.9 and 49.3 were each revised slightly lower. France has been a conspicuous laggard in the Euroland recovery; however, even there favorable signs on the demand side point to some light at the end of the tunnel.
Japan’s May composite PMI was revised down 0.9 points to 52.1, but that still constituted a 9-month high. The service sector index printed above 50 as well at 53.8.
Australia’s revised composite and service PMIs printed at 3- and 4-month lows of 52.1 and 52.5.
China’s May composite and service sector PMIs of 54.1 and 54.0 reflected the fastest rates of positive growth in about a year.
India continues to experience robust growth, but the composite and service sector PMI readings of 60.5 and 60.4 were below preliminary estimates for India and at 3- and 5-month lows.
The British composite PMI in May fell 1.1 points below April’s 1-year high to a 2-month low of 53.0. The services PMI was at a half-year low, however.
Russia’s composite PMI dropped to a 16-month low last month of 51.4. Its service sector reading of 49.8 also was the lowest since January 2023.
South Africa’s S&P Global private purchasing managers index ticked up 0.1 point to a 3-month high of 5.0.4 in May.
In the United Arab Emirates, the non-oil PMI in May matched April’s 8-month low of 55.3.
Lebanon’s private PMI fell to a 16-month low of 47.9.
The private PMI readings for Hong Kong and Singapore — 49.2 and 54.2 in May — were at a 7-month low and a 2-month high, respectively.
Australian GDP grew just 0.1% last quarter, its slowest pace since the third quarter of 2022. On-year growth of 1.1% was its slowest in 13 quarters.
U.S. revised May composite and service PMI readings of 54.5 and 54.8 are their best readings in 25 and 12 months.
The Bank of Canada’s policy interest rate of 5.0% since July 2023 has been cut to 4.75% in a move to lessen the degree of policy restraint. However, balance sheet normalization is to continue, and the released statement notably does not commit to any particular timetable of ensuing changes.
Recent data has increased our confidence that inflation will continue to move towards the 2% target. Nonetheless, risks to the inflation outlook remain. Governing Council is closely watching the evolution of core inflation and remains particularly focused on the balance between demand and supply in the economy, inflation expectations, wage growth, and corporate pricing behavior.
Just in: The ISM-compiled non-manufacturing U.S. purchasing managers index arrived at a 9-month high of 53.8 and significantly above what analysts were predicting. This tends to counteract any relief from the aforementioned ADP estimate of private jobs growth last month.
Copyright 2024, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Australian GDP, Bank of Canada, Euroland producer prices, National Bank of Poland, service sector purchasing manager indices
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