The UK manufacturing PMI index edged down to 47.8 from previous estimates but still beat forecasts. New orders dropped to a 7-month low and overall business confidence declined to a record low. The services sector data due for release tomorrow morning will inevitably register sharper deterioration as the economy heads towards a very sharp contraction. The data also registered close to 1m new welfare benefit claims in the last two weeks.
Risk appetite remained fragile and European equity markets suffered again but the Pound showed resilience with 3 week highs of 1.1363 against the Euro and hovering near 1.2400 on the Dollar. Sterling edged slightly higher this morning and there is no tier one data expected until tomorrow.
The March ADP employment report recorded a decline in private payrolls of 27,000 after a revised 179,000 increase for the previous month. Although this was much smaller than the expected decline of around 150,000 with the survey conducted in mid-March before most lockdowns took effect this was still the first decline in jobs since September 2017. The latest jobless claims data is due on today and monthly jobs report tomorrow.
The March ISM manufacturing business confidence index declined to 49.1 from 50.1, although this was above consensus forecasts of 45.0. The new orders index declined sharply to a 10-year low of 42.2 from 49.8 while employment declined at a faster pace. Order backlogs declined and prices fell at a faster pace on the month. There was, however, further deterioration in supplier deliveries due to on-going disruptions to supply chains and this will have inflated the overall index. The food, drink and tobacco sectors reported a monthly gain.
Despite fears over a steep US downturn, the Euro was unable to make any headway against the USD following the data with a retreat to near 1.0900 as the dollar attracted renewed defensive demand amid cash demands.
The final Euro-zone PMI manufacturing index was revised down to 44.5 from the flash reading of 44.8. The Italian and Irish indices both declined to a 10 year low as overall business confidence also slid to a record low. The EU Commission did, however, Introduce a short-time working scheme to help protect jobs.
Further Coronavirus developments in the Euro-zone remain negative with Italy confirming that the current lockdown would be extended to April 13th. Spain also recorded a further 864 deaths in the latest 24-hour period, the largest figure so far, although the rate of increase appears to be levelling out. As or writing the Euro trades just below the 1.0940 figure against the Dollar.
Data to watch
12:30 - USD - Unemployment claims
Posted in Daily Market News on Apr 2 2020