EUROZONE DATA: Weak manufacturing in France and Germany in May; energy production up
- Industrial production releases for May have been disappointing with Germany and France both seeing M/M falls in excess of 2% (while Portugal saw a -3.2%M/M print yesterday). Spain was an outlier - still marginally below consensus expectations but only falling 0.1%M/M.
- In France 4/5 of the manufacturing subcomponents fell (with falls pretty broad based) while in Germany, Destatis point to "significant declines" in the automotive industry and mechanical engineering. In Germany, capital goods fell 4.0%M/M, intermediate goods 2.7% and consumer goods 0.2%. Manufacturing production in Spain, in contrast, rose 0.8%M/M.
- However, energy production rose 2.6%M/M in Germany, 1.6%M/M in France and 1.4%M/M in Spain.
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MNI: GERMANY MAY FINAL SERVICES PMI 54.2 (FLASH: 53.9); APR 53.2
- MNI: GERMANY MAY FINAL SERVICES PMI 54.2 (FLASH: 53.9); APR 53.2
ITALY DATA: Services PMI Cites Expansion In Export Sales and Employment
The Italian May services PMI printed slightly softer than consensus at 54.2 (vs 54.5 cons, 54.3 prior), though remains in expansionary territory for the fifth consecutive month. The composite PMI was 52.3 (vs 53.2 cons, 52.6 prior), with Monday’s weak manufacturing print dragging.
Similar to the Spanish services PMI, respondents reported growth in export sales and employment, while input price increases continued to passed on to customers.
Key notes from the release:
- “Latest data meanwhile highlighted an expansion in new export sales, where the rate of increase hit a one-year high and was solid overall”.
- “Jobs growth quickened to the most pronounced for a year”… “Firms noted that the rise in workforce numbers was centred on hiring for permanent roles”.
- “Input price inflation was robust, though softer than April's one-year high. Where an increase was reported, firms mentioned greater energy, utility and staffing costs”.
- “The rate of charge inflation was solid”…“with higher selling prices linked to the pass-through of higher costs to customers”.
UK: First Debate A Dead Heat, Does Little To Shift Election Dial
The first televised debate of the general election campaign took place on the evening of 4 June, with PM Rishi Sunak facing off against Labour leader Sir Keir Starmer. The ill-tempered affair allowed both main party leaders to repeat their main campaign points repeatedly, but has done little to change pre-existing perceptions at least according to snap polls and betting markets.
- A snap poll by YouGov showed essentiall a dead heat, with 51% saying Sunak won the debate to 49% saying Starmer was the victor. In a Savanta poll, Starmer was ajudged to have narrowly won by 44% to 39%. Notably, while both polls showed the leaders as close in terms of who 'won', Labour's Starmer was broadly seen as better on 'personality' questions. With YouGov starmer was seen as more trustworthy, likeable, and 'in touch with ordinary people', while Sunak was seen as more 'prime ministerial'. With Savanta Starmer was seen as more honest, thoughtful and good at remaining calm.
- Sunak's most effective moments came when claiming Labour would imposed a GBP2k tax hike on each UK household. With YouGov Sunak was seen as better on tax, and immigration, while Starmer won on cost of living, the health service, education, and climate change.
- Betting markets showed little reaction, with a Labour majority still seen as almost guaranteed with a 94.3% implied probability according to Smarkets.
- The next debate is a seven-way contest between senior figures from the Conservative, Labour, Liberal Democrat, Reform, Green, Scottish Nationa, and Plaid Cmyru parties takes place on the BBC on 7 June.
Chart 1. Betting Market Implied Probability of UK Election Outcome, %
Source: Smarkets
