Overview of the January's Purchasing Manager Indices. (US added)
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Periphery business
cycle monitor – Danske
Bank
Euro area periphery data continues its improvement and in
line with that sovereign yields have move downwards even though spreads have
widened a bit recently…We look for a continued gradual improvement. The return
of confidence is expected to result in a slow recovery in domestic private
sector demand this year.
Japan:
Services activity growth eases in January
Russia:
Private sector output falls in January
India:
Private sector output falls for seventh month running, although marginally
Ireland:
Further sharp rise in activity as export growth hits record high
South
Africa: Fractional improvement of operating conditions recorded in
January
Spain:
Services activity increases at fastest pace in six-and-a-half years
The Spanish service
sector backed up the solid performance seen in December with accelerated growth
of activity in January, while we even saw an end to job shedding in the sector
for the first time since the economic crisis began. Companies are still having
to offer discounts in order to secure sales, but they are increasingly
optimistic that 2014 can see a recovery get properly underway.
Italy:
Downturn in service sector business activity slows at start of 2014
France:
Slower fall in activity at service providers in January
Germany:
Slowest rise in service activity for three months at the start of 2014
Germany’s private sector retained its solid growth momentum at the start of 2014,
with activity expanding at the quickest pace since June 2011. A closer look at
the data, however, shows that the latest improvement was largely driven by manufacturers,
whereas services output growth eased to a three-month low.
New order growth in
the service sector inched down to a near-stagnant pace in January, with anecdotal
evidence suggesting that some clients hesitated to release their budgets on
time. Nevertheless, companies felt confident about their business outlook,
resulting in further job creation.
Eurozone:
Economy expands at fastest pace since June 2011
The final reading of
the eurozone PMI was down slightly on the earlier flash reading but nevertheless
signals a very encouraging start to the year. Companies are reporting the strongest
growth of business activity for two-and-a-half years, putting the economy on
course to grow by 0.5% in the first quarter if this pace is sustained.
We should expect GDP
forecasts for 2014 to start being revised up if the PMI continues to rise, with
the consensus of 1.0% growth already looking somewhat conservative.
While Germany is providing the main impetus to the
recovery due to its sheer size, the upturn is becoming broad-based, which in
turns adds to the likelihood that it can be sustained. Spain and Ireland are
now seeing robust growth, undergoing their strongest phases of expansion since
2007, while Italy is also returning to growth and France’s business sector is also showing signs of
stabilising.
The main concern is
that the recovery is still all-too dependent on the manufacturing sector.
Although the service sector has returned to growth, its weak pace of expansion
reflects still-subdued domestic demand – especially from consumers – in many Eurozone
countries, notably France and Italy. A revival in consumer sentiment in these countries will be an
important ingredient of a more robust upturn.
UK:
Service sector growth slows in January, but remains elevated
Markit’s PMI surveys
indicate that US business enjoyed a strong start to 2014. Despite
disruptions caused by record low temperatures in parts of the country, business
activity rose strongly again in both manufacturing and services. The full picture
from the two surveys is one of growth weakening only very marginally in January
despite the big freeze, setting the scene for another quarter of at least 3%
growth.
The pace of hiring
ticked down slightly, but remains resilient as firms report the brightest business
outlook for three years. The January survey is signalled service sector payroll
growth of around 180,000 on top of a 10,000 rise in manufacturing. We’d
therefore expected to see monthly non-farm payroll growth revert back to around
200,000.
ISM Non-Manufacturing Index increases to 54.0 in January – Calculated
Risk
U.S. services growth
quickens in January: Markit – Reuters