SWEDEN: Rebound In Services PMI Suggests July Was An Outlier
There was a solid rebound in the Swedish services PMI in August, rising to 53.4 after 49.0 in July and 54.6 in June. This suggests the July print was an outlier. The services reading follows an increase in the manufacturing PMI on Monday, and joins a broader set of improving Swedish activity indicators/signals from the past few weeks. That said, a Riksbank September cut remains on the cards if tomorrow’s August flash CPIF print surprises to the downside.
The employment component, which had fallen to a 5-year low of 37.8 in July, rose back to 44.6 in August (vs 43.1 in June). The index remains firmly in contractionary territory though, and continues to send a more pessimistic signal than the Economic Tendency Indicator’s services expected employment series.
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SWITZERLAND DATA: Transport Services Dragged Up July CPI Print
Looking at the details of the Swiss CPI print, upside momentum from transport and recreation categories stands out (contributing a combined 0.21pp more than in June). Overall it remains that this was the second consecutive positive print in Swiss CPI.
⦁ Transport services (airfares but also "public transport abroad" in particular) and package holidays (part of recreation category) were behind the acceleration here, having seen higher Y/Y prints this time - that might help explain parts of the unusual higher services / imported inflation combination.
⦁ Food inflation meanwhile has fallen this time, contributing 0.06pp less than in June.
⦁ Further details see table / chart below:
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GILTS: A slightly lower Open versus the Calls
- Gilt saw a slightly lower open vs the calls, this was driven by the tick lower in EGBs on the higher Equity Cash Open.
- Gilt futures was expected to somewhat outperforms, but it is so far sitting flat against the German 10yr on the spread.
- Respective initial support and resistance, stand at 91.86 20-day EMA , and 92.69 (Friday's high).
