The United States reaffirms that its economy is at the forefront of the macroeconomic world cycle. In the short term, this is bad news, which makes us suspiciously expect the most important publication of this week – Friday's data on the labor market,.
China released its February PMI estimates in industry and services on Saturday. The numbers turned out to be record low, having fallen even under the lows of the height of the global financial crisis of 2008/9. decreased from 50.0 to 35.7, and activity in was even worse: the index crashed from 54.1 to 29.6. The failure turned out to be noticeably more destructive than economists expected on average. Although in this case there are more questions to their forecasts than to the reliability of the Chinese data.
On Monday, the turn came for indicators from Europe and America. fell to 50.1, clinging to the territory of growth (above 50.0). In the comments to the publication, it is noted that global supply chains have mostly affected manufacturing industries, especially electronics. Although the overall prevalence of positive sentiment is noted in the review, we must not lose sight of the fact that the indicator curve interrupted its growth. (like most other world indices), confirmed the slowdown in positive dynamics and has been declining for the third month in a row.
In contrast, the final data on PMI in the eurozone came out not only stronger than expected, but also confirmed the trend to strengthen the movement from the lows of September-October last year.
Apparently, the weakening of the single currency in previous months has provided significant support for business activity. Moreover, it continues to possess sufficient strength to overcome the negative sentiment from the spread of coronavirus. Against the background of these data, growth seems quite understandable, since the contrast between the indicators from the USA and Europe is now clearly in favor of the EU.
However, such an arrangement should not be misleading. Business in America is traditionally the first to respond to changes in the business climate around the world, but also to be the first to recover at a very fast pace, in contrast to the long-growing Europe.
This means that from the statistical data from the USA in the coming days and weeks we can see unpleasant surprises. At the same time, relatively positive news can come from Europe, which simply can turn out to be only belated assessments of the past.
FxPro Analyst Team