After this morning's ugly picture across European PMIs, preliminary June US PMIs were also expected to decline modestly, but remain in expansion (above 50) for both manufacturing and services.
But, in the face of puking US hard macro data, the soft survey data surprised to the upside with Manufacturing at 51.7 (51.3 prior, 51.0 exp) and Services at 26-month highs at 55.1 (54.8 prior, 54.0 exp)...
Source: Bloomberg
The US Services print is above all analysts' estimates...
Source: Bloomberg
Quite a divergence from the rest of the world...
Source: Bloomberg
Commenting on the data, Chris Williamson, Chief Business Economist at S&P Global Market Intelligence said:
“The early PMI data signal the fastest economic expansion for over two years in June, hinting at an encouragingly robust end to the second quarter while at the same time inflation pressures have cooled.
“The PMI is running at a level broadly consistent with the economy growing at an annualized rate of just under 2.5%. The upturn is broad-based, as rising demand continues to filter through the economy. Although led by the service sector, reflecting strong domestic spending, the expansion is being supported by an ongoing recovery in manufacturing, which so far this year is enjoying its best growth spell for two years.
“The survey also brings welcome news in terms of job gains, with a renewed appetite to hire being driven by improved business optimism about the outlook.
“Selling price inflation has meanwhile cooled again after ticking higher in May, down to one of the lowest levels seen over the past four years. Historical comparisons indicate that the latest decline brings the survey’s price gauge into line with the Fed’s 2% inflation target.”
Not exactly a Fed rate-cutting scenario!!
As we detailed earlier, judging by the unexpected freefall and across-the-board miss in Europe's PMIs this morning, the ECB may have cut rates too little, too late.
The Euro area composite flash PMI declined by 1.3pt to 50.8, below consensus expectations of 52.5, prompting analysts to comment that "this should be a further reason for the ECB to proceed cautiously with interest rate cuts."
According to Goldman, the deceleration in the composite index was broad-based across sectors, though skewed towards the manufacturing sector, where the output index fell (by 3.4pt) to 46.0. Here is a snapshot of the reports:
Across countries, the decline in the area-wide index was broad-based.
In its commentary on the results, Goldman said it sees three main takeaways from today's data.
In response to the ugly PMI prints, European bond yields slumped and also dragged down the EUR, while pushing the USD higher. Curiously, despite the virtual assurance of much more QE coming, both gold and crypto also slumped to session lows after the dismal numbers. Expect that to reverse once the selling momentum ignition algos are exhausted.