In February, the US manufacturing sector expanded for the seventh consecutive month, but at a slower pace. The manufacturing ISM dropped from 58.4 to 56.5, while the consensus was looking for only a slight decline (to 57.9). The breakdown show a significant drop in production (58.4 from 66.2) and new orders (59.5 from 65.9), but also new export orders (56.5 from 58.5) and imports (56.0 from 56.5) deteriorated. Employment (56.1 from 53.3), backlog of orders (61.0 from 56.0), supplier deliveries (61.1 from 60.1), inventories (47.3 from 46.5) and customer inventories (37.0 from 32.0) improved in February. Inflationary pressures eased as the prices paid index dropped from 70.0 to 67.0. Although the index missed expectations, manufacturing activity continues to expand at a relatively strong pace, but the recovery cooled down a bit.
In January, US personal income rose for the sixth consecutive month, but at a slowed pace than expected. Wages and salaries were up by 0.4%. Personal income rose by 0.1%, while an increase by 0.4% was forecasted. Personal spending, on the contrary, rose by 0.5%, while an increase by 0.4% was expected. The savings rate dropped from 4.2% to 3.3%, the lowest level since October 2008. Personal spending picked up well in the previous months, but high employment may continue to put a drag on consumer spending in the months ahead.
EMU: unemployment stabilized at 9.9% in January
In the euro zone, the unemployment rate stayed unchanged at a downwardly revised 9.9% in January, while the consensus was looking for an increase to 10.1%. In January, 15.683 million were unemployed in the euro area, according to eurostat estimates. Compared to December 2009, the number of people unemployed rose by 38 000 in the euro zone. This outcome indicates that the rise in the number of job losses is moderating.
Other: UK manufacturing PMI unchanged at 15-year high
In the UK, manufacturing PMI stayed unchanged at a downwardly revised 56.6, while the consensus was looking for a marginal decline. UK manufacturing PMI is now at its highest level in 15 years and also the underlying picture is encouraging as export orders posted the strongest growth on record, while the output index rose to its highest level since 1996. Employment expanded for the second consecutive month. The details indicate that the lower exchange rate is finally starting to boost demand for UK output. In the euro zone, the final figure of February manufacturing PMI showed a marginal upward adjustment compared to the first estimate (54.2 from 54.1). In Greece, business conditions in manufacturing worsened as the manufacturing PMI dropped to a 10-month low.
The final figure of UK M4 money supply showed a downward revision from 5.1% Y/Y to 4.9% Y/Y. Mortgage approvals dropped more than expected in January (48.2K from 58.2K), to its lowest level in eight months. The Bank of England said that the drop in mortgage approvals was due in part to unseasonal icy weather and the end of a tax beak for some home sales. Consumer credit, on the contrary, posted its biggest rise since November 2008, increasing by £500 million after an upwardly revised increase of £265 in December.
