First day of month is usually busy with monthly manufacturing data (PMI) from all around the world
• Sweden/Norway – upside surprises in the Nordic world and continuation of expansion
• Switzerland – 66.9 is the highest july PMI since records began in 1995
• Russia – 52.7 in July from 52.6 in June. Industrial recovery remains on track.
• UK – 57.3 is slightly better than expected and a strong number
• China – while July is usually a slow month 51.2 reading is unusually bad. But keep in mind that China PMI has a weak record as a leading indicator. At any rate, some slowdown in Chinese economy appears to be unfolding.
• Eurozone – Germany is exceptionally strong and still on an improvement path while the rest shows slowdown. Overall the biggest improvement is in employment – strong likelihood than unemployment has peaked.
• US – ISM fell but by smaller margin than expected and remains at a very high level. Slowdown is consistent with natural easing in a recovering economy rather than a troubling new development. Export orders rose suggesting consumption weakness is domestic. Employment index continues to improvement – perhaps US employment situation isn’t as bad as people fear.
Overall manufacturing remains strong all over the world. Germany remains exceptionally strong probably powered by weak euro and strong exports while US shows that second recession is very unlikely unless consumers collapse (I don’t think a sudden collapse is likely – it would just remain depressed for a long time leading to a sluggish economic picture). China’s slowdown will lead to additional stimulus measures.
On corporate earnings side, HSBC and BNP Paribas both banking giants came out with big positive surprises pushing up financials and the stock markets overall.
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