Stronger activity...
Yesterday we had a bunch of important PMI indices across the globe. Here are the news:

• US – ISM inched up again but less than expected (54,1 vs a consensus of 54,4 pts.) confirming a slower improvement indicated by regional indices
• The Euro zone – the index leaped from 46,9 pts. in December to 48,8 pts. in January but that was only 0,1 pts. higher than initially reported a week ago
• UK – the index surged from 49,6 to 52,1 pts., reducing a chance for more QE from the BoE which is definitely positive for GBP – other factors held constant
• China – interestingly the market focused on the CFLP version which recorded a rise from 50,3 to 50,5 pts.; meanwhile, usually favored HSBC index confirmed a flash reading of 48,8 pts.
• Switzerland – the index dived from 49,1 (initially reported 50,7) to 47,3 pts., failing to meet a consensus of 51,4 but honestly in this case it was more a problem of an unrealistic consensus  - the index jumped from 44,8 to 50,7 pts. in December and it was a clear outlier
• …(more than?) reflected in prices

To sum up the data, there are not major surprises other than the UK but even here one could have hoped for a stronger reading, gouging from the flash euro zone readings. Obviously the improvement in the euro zone is huge news as it indicates a reversal in economic cycle few months sooner than we expected. However that seems to be well reflected in lower yields across the peripheral debt at the moment. In the US the activity might hold above the 50 points mark but if history is telling us anything, equities move more less along with the PMIs so if the ISM is done with the “rally” so should be Wall Street. And with many hurdles to growth in a near future, the US economy might find it hard to accelerate more.

Przemysław Kwiecień PhD, Chief Economist

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