Today’s Comment
Today the economic indicator ISM industry for February will be released. In January, the economic trend indicator rose to the highest level since August 2004.
As ISM industry correlates quite strongly with GDP and industrial production, this indicates quite strong growth. So far, ISM has increased so steeply that it indicates a relatively strong upswing. We estimate that ISM declined somewhat in February. This is due to a number of special factors while the fundamental circumstances still indicate a high level for the business trend indicator. In January, PMI manufacturing rose surprisingly in the UK. and at 56.7 it is now at the highest level since 1994. After the steep increase in January, we expect that PMI manufacturing will fall a bit in February. Sweden moved out of the deep recession in Q2, but the upswing was not impressive with growth rates of 0.3% and 0.2%, respectively.
We expect Q4 growth to similarly modest, but there are indications that the upswing will strengthen early this year. Once again Pound sterling weakened fairly strongly on Friday and overnight due to the revised Q4 GDP figures. The GDP figures were not just negative as the quarterly growth was revised up, but the market focused more on the annual growth where the revised figures disappointed. GDP still gets bad press, and technically there is scope up to about 90.50 for EUR/GBP (GBP/DKK down to about 824). If the UK continues to offer negative surprises, this may at some time challenge our current forecast. However, so far it has no bearings on our estimates.
Today’s Key Events
-
08:30 PMI (SEK)
-
09:00 PMI manufacturing (NOK)
-
09:30 GDP (SEK)
-
09:55 PMI manufacturing (DEM)
-
10:00 PMI manufacturing (EUR)
-
10:00 Retail sales (NOK)
-
10:30:00 PMI manufacturing (GBP)
-
11:00:00 Unemployment (EUR)
-
14:30:00 Personal income (USD)
-
16:00 ISM manufacturing (USD)
Sunday night
- 00:30 Unemployment (JPY)
Today’s Chart – EUR/GBP
