There was a raft of disappointing PMI survey results from developed markets on Friday which will further fuel market concerns around a more marked slowdown in economic growth than has been the case to now. In the US, the manufacturing PMI was worse than anticipated as it fell back to 46.3 – this was the lowest reading since December and missed projections of 48.5. Services held up comparatively well at 54.1, broadly in line with expectations but also somewhat slower than the previous month’s 54.9. The composite PMI reading was 53.0, down from 54.3.
France’s headline PMI survey saw a surprise contraction in June on the preliminary reading as it fell to a contractionary 47.3, down from 51.2 in April and missing projections of 51.0. Manufacturing was expected to remain weak, and it came in at 45.5, broadly in line with both recent readings and consensus. However, services also turned contractionary at 48.0, missing projections of 52.1. This was the first negative reading for the services component since January. Germany’s composite PMI also disappointed, and while it remained positive at 50.8 this was short of the predicted 53.3. Services were somewhat weaker than predicted but remained positive at 54.1. However, manufacturing fell to just 41.0, missing projections of 43.5 and marking the weakest reading since the height of the Covid-19 crisis. The composite Eurozone PMI remained positive but fell to 50.3, from 52.8 previously and missing projections of 52.5. Both services and manufacturing underwhelmed.
The UK’s PMI for June was also weaker than anticipated, coming in at 52.8 on the composite, down from 54.0 in May and missing the consensus prediction of 53.6. Manufacturing was at 46.2 while services came in at 53.7. More positively, UK retail sales expanded 0.3% m/m in May. Stripping out auto fuel the gain was a lesser 0.1%, but this was still stronger than the predicted 0.3% contraction, with warm weather helping to drive online sales of outdoor goods and summer clothes. The UK consumer has held up comparatively well so far in the face of a series of rate hikes, and the GfK consumer confidence index rose for the fifth consecutive reading to a 17-month high for June in other data out Friday. However, the 50bps hike by the Bank of England last week will likely dampen confidence and spending in the coming months as the rise feeds through into higher mortgage payments and effects a commensurate decline in disposable incomes.
Turkey’s trade deficit widened to USD 12.53bn in May, from USD 8.74bn in April. This makes it the second widest in the past 20 years, somewhat narrower than the USD 14.3bn deficit recorded in January. ‘Pearls, Precious Stones & Metals’ imports were up 91% y/y, likely reflecting ongoing demand for gold. Meanwhile tourist arrivals in Turkey were up 16.2% y/y in May as the sector continues to realise strong growth in a positive for the current account.
Bahrain CPI inflation was at 0.7% y/y in April compared to -0.1% the previous month.