February Manufacturing Purchasing Manager Surveys, Tariff Deadlines and Geopolitical Fallout from Friday’s White House Debacle – Currency Thoughts

February Manufacturing Purchasing Manager Surveys, Tariff Deadlines and Geopolitical Fallout from Friday’s White House Debacle

March 3, 2025

(202) Financial markets have seen some big moves this first business day of March.

• The dollar has dropped 0.9% against the euro and sterling and has also lost 0.4% against the Mexican peso and Australian dollar and by 0.2% relative to the Swiss franc, Canadian dollar, Korean won, and New Zealand dollar. The weighted DXY dollar index has lost 0.7% despite a 0.5% dollar advance against Japan’s yen.
• Ten-year sovereign debt yields jumped  overnight by 11 basis points in the U.K., 10 bps in Germany, 8 bps in France, 7 bps in Spain, 6 bps in Italy and 4 basis points in Japan.
• Equity markets have shown mixed results, closing up 4.0% in Indonesia, 1.7% in Japan and 0.9% in Australia but falling by 3.4% in South Korea, 1.3% in Taiwan, and 0.1% in China.
• Bitcoin’s price, which had been as weak as $79 on Friday, soared on Trump’s revealed intention to create a U.S. strategic crypto reserve and got has high as $94.5k earlier today before easing to a net 1.3% downtick.
• Gold’s price is 1.4% stronger, and oil has risen by 0.5%.

About half of the America and most of the rest of the world sympathize with Ukraine’s dire position after the breakdown of talks between Zelensky and Trump before the weekend. European leaders consider trust shattered and a Rubicon crossed. At a rapidly convened conference, they are pledging a considerable buildup of their own defenses and pledging to extra military aide for Ukraine. The fiscal implications of a hasty military buildup drove long-term interest rates higher, even though expectations that the European Central Bank will cut interest rates this Thursday remain unshaken.

U.S. tariff increases against Canada, Mexico and China are set for tomorrow, barring a last-minute reprieve. Given Europe’s reaction to Trump’s stance on Ukraine, punitive levies against Europe are probably coming soon, too, in a further escalation of tensions between those former pillars of NATO.

Purchasing manager indices are diffusion indices, with scores above 50 signaling improved conditions and those below 50 connoting deterioration. The distance above or below the breakeven point represents the intensity of growth or contraction. Higher manufacturing purchasing manager readings in February than January were attained in Euroland (a 24-month high of 46.5), Ireland (1-year high of 51.9), the Netherlands (8-month high of 50.0), Italy (5-month high of 47.4), Austria (2-year high of 46.7), Germany (25-month high of 46.5), France (9-month high of 45.8), Sweden (3-month high of 53.5), Switzerland (4-month high of 49.6), Norway (4-month high of 51.9), Russia (5-month high of 50.2), Poland (34-month high of 50.6), Czech Republic (8-month high of 47.7), Hungary (9-month high of 51.0), Turkey (2-month high of 48.3), Japan (2-month high of 49.0), Thailand (2-month high of 50.6), Taiwan (2-month high of 51.5), Malaysia (6-month high of 49.7), Vietnam (2-month high of 49.2), China (3-month high of 50.8), Indonesia (1-year high of 53.6), Australia (2-year high of 50.4), and Brazil (5-month high of 53.0). The Chinese government’s officially-compiled manufacturing and non-manufacturing PMI readings of 50.2 and 50.4 in January were also above January scores and at 3- and 2-month highs.

The above extensive list of PMI rises far exceeded the alternative short list of examples of a lower score:

• India’s manufacturing PMI fell to a 14-month low but, at 56.3, signaled continuing robust improvement.
• Spain’s manufacturing PMI fell below 50 to a 13-month low of 49.7, but optimism about the future climbed.
• The Absa-compiled South African PMI dropped 0.6 points to a 6-month low.
• The British manufacturing PMI dropped 1.4 points to 46.9, its fifth sub-50 score in a row and a 14-month low.
• And in the Philippines, the manufacturing PMI fell 1.3 points to 51.0, an 11-month low.

Other economic data releases earlier this Monday featured the preliminary consumer price figures of Euroland for February. Such did not recede quite as much as forecast, instead dipping 0.1 percentage point to a a 2-month low overall of 2.4% and a 37-month core inflation low of 2.6%. The monthly increases of total and core consumer prices in the latest month were 0.5% and 0.6%, thanks especially to a 0.7% advance in the component for services.

Turkish CPI inflation fell to a 37-month low of 40.2% in February. This was the ninth straight deceleration from 75.4% recorded last May.  Meanwhile, Turkish producer price inflation of 25.2% last month was at a 50-month low and down from 157.7% in October 2022.

Consumer price inflation in Pakistan unexpectedly swung under zero percent last month to a 299-month low of -0.1%.  In the Philippines, CPI inflation slowed 0.9 percentage points to a 53-month low of 1.5%, and Croatian CPI inflation settled back from January’s 10-month high of 4.0% to a 2-month low of 3.6%.

Italian GDP growth in full 2024 has been revised upward by 0.2 percentage points to 0.7%. That matches the 2023 Italian growth rate and is the sixth sub-1.0% result in the past ten years.

Austrian GDP declined by 0.4% both quarter-on-quarter and year-on-year during 4Q 2024. The 12-month rate of change was negative for a seventh straight quarter. In Estonia, by contrast, real GDP increased 0.7% in 4Q 2024, its largest quarterly rise in three years and resulting in an 11-quarter high year-on-year pace of 1.2%. For 2024 as a whole, GDP fell by 1.1% in Austria and by 0.75% in Estonia.

Just In: The S&P Global-compiled U.S. manufacturing purchasing managers index in February jumped to a 32-month high of 52.7 from a preliminary estimate of 51.6 and January’s reading of 51.2. The data were clearly affected by U.S. tariff plans that perhaps overstated the true change due to stockpiling ahead of the promised levies. Canada has been a particular target of the tariff changes, so it’s not surprising to see that the Canadian February purchasing managers index for manufacturing sank to 47.8 from 51.3 in the prior month. 47.8 is the lowest reading since last July, which in turn was the lowest score since the end of 2023.

Copyright 2025, Larry Greenberg All rights reserved. No secondary distribution without express permission.

Tags: Euroland CPI, Italian GDP, manufacturing PMIs February 2025, Turkey CPI and PPI

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on Monday, March 3rd, 2025 at 7:56 am and is filed under New Overnight Developments Abroad – Daily Update.
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