E The Daily Shot And Data - February 3, 2016

We begin with the Eurozone where a number of economic reports have been better than expected.

1. While the area’s manufacturing activity expansion has slowed, there are a couple of positive trends, particularly Spain and Greece. Spain now has the fastest growing manufacturing sector in the Eurozone.

Source: ?Markit

Greek manufacturing is not growing (PMI = 50) but has seen a remarkable stabilization over the past few months.

Source: ?Markit

2. The Eurozone unemployment rate hit the lowest level since September 2011.

Part of this trend is driven by the declines in German unemployment rate which fell to the lowest level on record. At current rate of GDP growth Germany will be facing labor shortages in the next few years.

Source: Investing.com

Irish unemployment rate fell to a 7-year low as the nation prepares for elections.

There are of course several weak spots in the euro area labor markets, one of which is Italy. Italian unemployment rate decline has stalled.

Source: Investing.com

Here are the latest unemployment rates across the EU.

Source: @fastFT

In spite of improving labor market fundamentals and all the monetary easing, Eurozone’s wholesale deflation has not been tamed. The year-over year PPI has remained in the red since 2013. This gives Draghi additional ammunition he needs to pull the trigger on new stimulus.

Source: Investing.com

We’ve had some positive news out of China as well. Here are two key developments.

1. China’s services sector activity surprised to the upside, offsetting the contraction in manufacturing.

Source: Markit

2. China’s steel production PMI rose to a nine-month high in January as stimulus kicks into gear. Clearly some of that production is being exported, but there seems to be demand. Iron ore futures jumped (charts below show Iron ore futures on NYMEX and in Singapore).