Preliminary Global Manufacturing PMIs for July

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For traders looking to see where the markets might be headed for the rest of the month, tomorrow’s data could be the catalyst for sentiment. The PMI indices are the most recent data, and they are particularly relevant now that investors are assessing the impact of central bank policy on the economy.

If we get a string of good PMI data, it could push risk sentiment higher, depress the dollar and support emerging markets. If the flash PMI were to disappoint, then the market reversal observed at the end of last week could accelerate. Keep in mind that this is preliminary data and at the beginning of next month there could be revisions.

What to pay attention to

Australia

The consensus is for a bag mixed down, but generally still expanding. Commodity prices were down, but the main exporter to China seems to continue to outperform its global peers. Australia’s manufacturing PMI is expected to slip a bit to 55.0 from 55.7, while the services PMI is expected to edge higher to at least 51.0 from 50.9 previously.

France

As usual, being the first to signal its exit from the shared economy, it could set the tone for Europe. With energy prices rising faster in France than in Germany, concerns about industrial performance during the winter have increased. The French manufacturing PMI should continue to contract to 48.9 from 49.5 previously. The Services PMI is expected to remain positive but also decline to 52.5 from 53.2.

Germany

If the biggest economy in the Eurozone has a different result than France, it could change market sentiment. However, growing concerns over energy supply should keep optimism under pressure. Just this morning it was announced that Nord Stream 1 would be closed again for 3 days, after German authorities confirmed that nuclear power plants would not be extended. German The manufacturing PMI is expected to fall below that of France to 48.3 from 49.3 previously. Services are also expected to fall further in the contraction to 49.0 from 49.7 previously.

Eurozone

It is unlikely to impact markets unless other countries manage to significantly differentiate themselves from the two largest economies. The manufacturing PMI is expected to contract further to 49.0 from 49.9, while the services PMI is expected to remain barely expanding to 50.5 from 51.2.

UK

Britain is expected to continue to defy the trend in Europe and remain substantially expanding despite authorities fearing a recession is imminent. While the UK is expected to face cost of living pressure due to energy supply issues, there is not yet a need to plan for industrial shutdowns as is the case on the Continent. Nevertheless, optimism should run out of steam a bit. The manufacturing PMI is expected to come in at 51.3 from 52.1 previously and the services PMI is expected to slip to 52.0 from 52.6 previously.

WE

The United States is expected to reverse the trend, with manufacturing continuing to expand while services improve but remain in contraction. One would expect US industries to bear some of the potential impact of energy problems in Europe. But tighter Fed policy and a potential NBER could officially declare a recession, which could weigh on consumer sentiment, even if retail sales continue to fall. The manufacturing PMI is expected at 51.9 vs. 52.2 previously, a slight reduction in optimism. The Services PMI is expected to rise significantly to 49.1 from 47.3 previously.


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