The US dollar is sporting a softer profile across the board, though remaining largely in the ranges seen over the past couple of sessions. At the same time, the news stream suggests that the global synchronized growth cycle strengthened late last year and is bound to carry over into the New Year.
The mostly firm manufacturing PMIs are being joined by the service sector surveys. Moreover, the details are often stronger than the favorable headline optics. China’s Caixin service PMI rose to 53.9 from 51.9. The Bloomberg median forecast had expected a small decline. It is the highest since August 2014. New business was the best since May 2016.
The eurozone followed suit. The service reading ticked up to 56.6 from the flash reading of 56.5 and 56.2 in November. In turn the composite reading rose to 58.1 from the flash report of 58.0 and November’s 57.5. The strength of the new orders component points to the momentum and the strength of employment suggest the virtuous cycle remains intact.
After reporting disappointing manufacturing and construction PMI, the UK was redeemed with a stronger than expected service PMI today. It rose to 54.2 from 53.8. The median forecast was for a rise to 54.0. The composite stands at 54.9, which would have been unchanged, but the November reading was pared to 54.8. The UK also reported a host of other data and the take away message is constructive. Nationwide’s home price index rose more than expected in December, making for a 2.6% year-over-year rise. Consumer credit rose GBP1.4 bln in line with expectations, though net mortgage lending and approvals increased more than expected.
Yesterday the US reported stronger than expected construction spending, ISM manufacturing (with a jump in new orders to its highest level since 2004), and stronger than expected auto sales. Canada also reported healthy car sales. Canadian auto sales rose 4.6% in 2017, the eighth annual increase and the fifth consecutive record high. Last year’s sales topped two million for the first time.
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