MARKET COMMENTARY

MARCH 2022

In the US, in March, data showed that the S&P Global US Manufacturing PMI increased to 58.8 from last month’s figure of 57.3. Data reflected the strongest growth in factory activity in six months as domestic and foreign client demand increased. It was reported that the University of Michigan consumer sentiment index for the US decreased to 59.4 from February’s 62.8. It is the lowest reading since August of 2011. Rising inflation is eating away at consumer sentiment, as consumers recognize their standard of living has been reduced because their income is not keeping up with inflation. Inflation has been the primary cause of rising pessimism, with an expected year-ahead inflation rate at 5.4%, the highest since November 1981. It was reported that the S&P Global US Services PMI increased to 58.0 from 56.5 in February. The expansion in output quickened to the fastest for four months, amid stronger demand conditions and a steeper rise in new orders. Client demand strengthened despite a record rate of charge in inflation. Output prices increased as the cost burdens were largely passed through to customers.

In Europe, in March, it was reported that the S&P Global Eurozone Manufacturing PMI decreased to 56.5 from February's final 58.2. The data reflected the slowest improvement in operating conditions faced by goods producers since the beginning of 2021, with a rise in geopolitical tensions mentioned as a factor weighing on demand, and had a noticeable impact on business confidence, which fell to its weakest level since May 2020. Data showed that the S&P Global Eurozone Services PMI had a slight increase to 55.6 from the previous month's figure of 55.5. Data pointed to the strongest expansion in services output in four months, with production rising faster than in February. The consumer confidence indicator in the Euro Area was confirmed at -18.7, the lowest level since May 2020, driven by the war in Ukraine. The Consumer ESI measures consumer confidence on a scale between -100 to +100 where 0 indicates neutrality. It was reported that Business Confidence in the Euro Area decreased to 1.67 from 1.79 points in February of 2022.

In Japan, in March, data showed that the au Jibun Bank Japan Manufacturing PMI increased to 54.1 from a final 52.7 a month earlier. Output returned to expansion territory, while new order growth quickened. It was reported that the au Jibun Bank Japan Services PMI increased to 49.4 from 44.2 in the prior month. The data was the third straight month of contraction in the private sector but the softest pace in the sequence, amid the impact of easing COVID-19 restrictions. New orders bounced back for the first time in three months, while employment rose the most in five months. It was reported that the consumer confidence index in Japan declined to a 14-month low of 32.8 from 35.3 in the previous month, amid rising Covid-19 infections. A consumer confidence index score above 50 indicates optimism, below 50 shows lack of confidence, and 50 indicates neutrality.

APRIL 2022

In the US, in April, it was reported that the S&P Global US Manufacturing PMI increased to 59.2 from 58.8 in March. The rate of overall factory growth accelerated for the third month and was the strongest since September, driven by a quicker expansion in output, a softer deterioration in vendor performance and a series-record rise in pre-production inventories. Data showed that the S&P Global US Services PMI decreased to 55.6 from 58.0 in March. The rate of output growth eased to the slowest for three months but was sharp overall. It was reported that the University of Michigan consumer sentiment for the US increased to 65.2 from previous month’s figure of 59.4. Inflation expectations were confirmed at 5.4% for the year ahead and 3% for the next five years.

In Europe, in April, data showed that the S&P Global Eurozone Manufacturing PMI decreased to 55.5 compared with March's final 56.2. Data pointed to the lowest reading since January 2021, as output increased only marginally and at the slowest rate in the current 22-month growth sequence. Due to ongoing supply constraints, many companies suffered further production curbs while new orders growth slowed. It was reported that the S&P Global Flash Eurozone Services PMI increased to 57.7 from 55.6 in March. The data pointed to the sharpest growth in services activity since last August, driven by a substantial increase in new business, while the rate of new order growth accelerated to an eight-month high. The consumer confidence indicator in the Euro Area declined further to -22 in April of 2022, the worst since April of 2020, and compared to previous month’s figure of -21.6, as the war in Ukraine and rising prices continue to take a toll on consumers' mood. The Consumer ESI measures consumer confidence on a scale between -100 to +100 where 0 indicates neutrality. There were decreases in households’ assessments of their own past financial situation and their intentions to make major purchases, while consumers’ expectations about their future financial situation edged up slightly after the steep fall of March.

In Japan, in April, it was reported that the au Jibun Bank Japan Manufacturing PMI decreased to 53.5 compared with a final 54.1 a month earlier, amid declining COVID-19 cases and a lift in pandemic restrictions. Nevertheless, this was the 15th straight month of expansion in factory activity, as output grew for the sixth time in seven months, with the rate of growth little-changed from March and new order growth continued for a seventh month running, albeit at a softer rate. At the same time, the job creation fell to a nine-month low. Data showed that the au Jibun Bank Japan Services PMI increased to 50.7 from a final of 49.4 in the prior month. The latest data marked the first expansion in services activity since last December, as pandemic restrictions were lifted following a decline in COVID-19 cases. New export orders rose for the first time in four months and at the fastest pace since October 2019, while employment accelerated, and backlogs of work fell following an increase in March. It was reported that the consumer confidence index in Japan increased to 33.0 from a 14-month low of 32.8 in the previous month. The latest data marked the first improvement in the index in six months, mainly supported by a rise in employment perceptions, after the government ended the quasi-state of emergency in late March following a decline in new COVID-19 infections and increasing vaccinations. A consumer confidence index score above 50 indicates optimism, below 50 shows lack of confidence, and 50 indicates neutrality.

MAY 2021

In the US, it was reported that the University of Michigan's consumer sentiment index decreased to 82.9 in May of 2021 from 88.3 in April. Rising inflation also meant that real income expectations were the weakest in five years. Meanwhile, the current economic conditions subindex fell to 90.8 from 97.2. Amid greater customer confidence and the reopening of non-essential businesses, data showed that the IHS Markit US Services PMI rose to 70.1 from 64.7. The latest data pointed to the sharpest rate of expansion since data collection for the series began in October 2009. It was reported that the IHS Markit US Manufacturing PMI increased to 62.1 from 60.5. New orders expanded while output growth accelerated despite the deterioration in vendor performance due to restrained operating activity.

In Europe, data showed that the ZEW Indicator of Economic Sentiment for the Euro Area increased to 84 in May of 2021 from the previous month's figure of 66.3. It was the highest data print since February of 2000. The ZEW Economic Sentiment Index measures consumer sentiment on a scale between -100 to +100 where 0 indicates neutrality. It was reported the IHS Markit Flash Eurozone Manufacturing PMI decreased to 63.1 from the previous month of 62.9. New order growth slowed but the pace of job creation remained solid. Data showed that the consumer confidence indicator in the Euro Area (Consumer ESI) rose to -5.1 from -8.1 in April, the highest level since October 2018. The Consumer ESI measures consumer confidence on a scale between -100 to +100 where 0 indicates neutrality. It was reported that the IHS Markit Eurozone Services PMI increased to 55.2 from 50.5 in the previous month. Business activity across the region’s service sector expanded in May at a rate not seen since June 2018. New orders for services increased for the first time since last July, growing at the fastest pace since January 2018.

In Japan, it was reported that the au Jibun Bank Japan Manufacturing PMI dropped to 53.0 from 53.6 in the prior month. The data reflected the latest wave of local COVID-19 cases and renewed regulations under state of emergency laws. Data showed that the au Jibun Bank Japan Services PMI decreased to 46.5 from 49.5 a month earlier. This was the 16th straight month of contraction in the service sector and the steepest pace since August 2020. The consumer confidence index in Japan decreased to 34.1 from 34.7. It was the weakest data point since February 2021, most main sub-indices worsened such as the overall livelihood, income growth, and employment perceptions.

JUNE 2021

In the US, it was reported that the annual inflation rate increased to 5% in May from 4.2% in April. This is the highest reading of inflation since August of 2008. Factors behind the rate are rising consumer demand as the economy reopens, soaring commodity prices, supply constraints, and higher wages as companies are faced with a labour shortage. It was reported that for June the University of Michigan's consumer sentiment index rose to 85.5 from 82.9 in May and the IHS Markit US Manufacturing PMI remained unchanged at 62.1. The data pointed towards growth in industrials activity amid a further easing of COVID-19 restrictions.

In Europe, during its June meeting, the European Central Bank left monetary policy unchanged. The Bank increased the speed of bond-buying earlier this year, however, a recent fall in borrowing costs in the Euro Area raised expectations that policymakers might start considering slowing the pace of purchases. It was reported that the IHS Markit Eurozone Manufacturing PMI increased to 63.4 from 63.1 in the previous month. Production increased for the twelfth consecutive month with the rate of expansion picking up again. Data showed that the IHS Markit Eurozone Services PMI increased to 58.3, from 55.2 in the previous month. The latest data signaled the steepest pace of expansion in the European service sector since July 2007. It was reported that the consumer confidence indicator in the Euro Area (Consumer ESI) increased to -3.3 in June 2021 from the previous month -5.1. The Consumer ESI measures consumer confidence on a scale between -100 to +100 where 0 indicates neutrality. Sentiment has been recently gained momentum by the reopening of the economy and the acceleration of COVID vaccinations.

In Japan, the government decided to lift the COVID-19 quasi-state of emergency in three prefectures, as infections steadily declined and the strain on hospitals eased. Data showed that the au Jibun Bank Japan Manufacturing PMI fell to 52.4 from 53.0 a month earlier. This was the weakest data since February, amid renewed curbs in some parts of the country following the latest wave of local COVID-19 infections. The au Jibun Bank Japan Services PMI increased to 48.0 in June 2021 from 46.5 in the previous month and the consumer confidence index increased to 37.4 from 34.1 in the previous month. This was the strongest data since February last year, as all main sub-indices (overall livelihood, income growth, and employment perceptions) improved. A consumer confidence index score above 50 indicates optimism, below 50 shows lack of confidence, and 50 indicates neutrality.

JULY 2021

In the US, it was reported that the University of Michigan's consumer sentiment index for the US dropped to 81.2 in July, from 85.5 in the previous month. The latest data signaled a further slowdown in service sector growth from May's record high, amid labor shortages and difficulties acquiring stock. The IHS Markit US Services PMI dropped to 59.9 from 64.6 in the previous month. Data showed that the IHS Markit US Manufacturing PMI hit another record high of 63.4 from 62.1 in June. Production increased slightly despite further reports of material shortages. Overall growth was supported by stronger output and new orders.

In Europe, data showed that the IHS Markit Euro Area Manufacturing PMI fell to 62.8 from a record high of 63.4 in June. Nevertheless, the sector has now recorded successive months of expansion since July 2020. The IHS Markit Eurozone Services PMI rose to 59.8 from 58.3 in the previous month. The latest data pointed to the strongest expansion in the service sector in 15 years, due to the easing of COVID-19 restrictions. New business openings increased at the fastest pace in 14 years and the pace of job creation hit a near three-year high. It was reported that Business Confidence in the Euro Area increased to 1.9 points in July from 1.7 points in June. Data showed that the consumer confidence indicator (Consumer ESI) in the Euro Area was -4.4 in July a decline from -3.3 in the previous month. The Consumer ESI measures consumer confidence on a scale between -100 to +100 where 0 indicates neutrality.

In Japan, it was reported that the au Jibun Bank Japan Manufacturing PMI rose to 53.0 from a final 52.4 in June. The au Jibun Bank Japan Services PMI declined to 47.4 from 48.0 a month earlier. This is the weakest pace of expansion in factory activity since February, as the economy struggled to recover from the COVID-19 pandemic. New orders declined for 1-1/2 years, while employment fell for the first time since December 2020. Data showed that the consumer confidence index in Japan increased to 37.5 from the previous month reported 37.4. It was the strongest data since February last year.

AUGUST 2021

In the US, data showed that the IHS Markit Manufacturing PMI decreased to 61.1 in August from 63.4 in the previous month. The data fell from a record of 63.4 in July, leading to the slowest growth in factory activity in 4 months. It was reported that the ISM Services PMI decreased to 61.7 from 64.1 in July. The IHS Markit US Services PMI was down to 55.1 from 59.9 in the previous month. The latest data signaled the strongest downturn in business activity across the U.S. service sector since May 2021. New order growth slowed to the weakest since August 2020, with foreign client demand falling at the fastest pace in 2021 to date. Data showed that the University of Michigan's consumer sentiment index for the US decreased to 70.3 from 81.2 in July. Consumers' extreme reactions were due to the surging Delta variant, higher inflation, slower wage growth, and smaller declines in unemployment.

In Europe, it was reported that Business Confidence in the Euro Area decreased to 1.75 points in August from 1.88 points in July. The consumer confidence indicator (Consumer ESI) in the Euro Area was confirmed at -5.3 in August, decreasing from -4.4 in July. The Consumer ESI measures consumer confidence on a scale between -100 to +100 where 0 indicates neutrality. Consumers’ assessments of their past and the future financial situation remained virtually unchanged. Considering the EU as a whole, consumer sentiment fell to -6.3 in August, from -5.6 in July. Data showed that the IHS Markit Eurozone Manufacturing PMI decreased to 61.4 from 62.8 from the previous month. The IHS Markit Eurozone Services PMI was reported little changed at 59.0 from 59.8 in July. New business intakes increased at a slower pace, but the increase was notably stronger than seen on average over the series history, and export demand growth was the second-fastest since the series began in 2014.

In Japan, data showed that the au Jibun Bank Japan Manufacturing PMI had decreased to 52.7 in August from a final 53.0 a month earlier. This was the seventh straight month of growth in the manufacturing sector, despite COVID-19 restrictions and supply chain disruptions. The au Jibun Bank Japan Services PMI was down to 42.9 in August from 47.4 in July. New orders fell the most in 15 months, while export sales dropped. It was reported that the consumer confidence index dropped to 36.7 from the previous month's figure at 37.5.

SEPTEMBER 2021

In the US, it was reported that the ISM Manufacturing PMI in the United States increased to 61.1 in September from 59.9 in August. The latest data pointed to one of the strongest rates of expansion since 1983, strengthen by solid increases in production and new orders. In conjunction, factories experienced longer delays on raw materials and paid higher prices for inputs. Data showed that the ISM Services PMI rose to 61.9 from 61.7 in August. Data pointed towards growth in the services sector, although the ongoing challenges with labor resources, logistics, and materials are affecting the continuity of supply. The University of Michigan's consumer sentiment index for the US increased to 72.8 above August’s 70.3.

In Europe, data showed that Business Confidence in the Euro Area decreased to 1.72 points in September from 1.74 points in August. The IHS Markit Eurozone Manufacturing PMI decreased to 58.6 from 61.4 in the previous month, the lowest reading since February. The IHS Markit Eurozone Services PMI decreased to 56.4 from 59.0 in August. Nevertheless, the index indicated a strong expansion in service business activity. The consumer confidence indicator (Consumer ESI) in the Euro Area increased to -4.0 above August’s -5.3. The Consumer ESI measures consumer confidence on a scale between -100 to +100 where 0 indicates neutrality. Data pointed to an increase in households’ assessments of their past financial conditions, their intentions to make major purchases, and especially their expectations about the general economic situation.

In Japan, it was reported that the Bank of Japan's index for big manufacturers' sentiment rose to 18 in Q3 of 2021 from 14 in Q2 of 2021. Data pointed to the fifth consecutive quarter of improvement and the highest data point since Q4 2018, as a recovery in the economy from the COVID-19 crisis gained momentum. The au Jibun Bank Japan Manufacturing PMI decreased to 51.5 from 52.7 in the previous month. This was the weakest growth in factory activity since a contraction in January, as COVID-19 restrictions and heightened supply chain, disruption decreased activity in the manufacturing sector. The au Jibun Bank Japan Services PMI rose to a three-month high of 47.8 from 42.9 in August. The consumer confidence index in Japan rose to 37.8 from August’s 36.7. It was the strongest data point since February 2020, as all main sub-indices improved. A consumer confidence index score above 50 indicates optimism, below 50 shows lack of confidence, and 50 indicates neutrality.

OCTOBER 2021

In the US, data showed that the IHS Markit US Manufacturing PMI decreased to 58.4 in October down from September's 60.7. The pace of expansion slowed to the weakest for ten months due to the smallest increase in production levels since July 2020 amid capacity constraints including material shortages. It was reported that the IHS Markit US Services PMI increased to 58.7 from 54.9 in the previous month. The data pointed to the strongest in three months and was supported by a stronger expansion in new business. The University of Michigan's consumer sentiment for the US decreased to 71.7 from September’s 72.8. The inflation expectations for the year ahead were at 4.8% while the 5-year outlook increased to 2.9%. The 2-yr yield settled at 0.53 while the 10-yr settled at 1.54%. The U.S. dollar index held firm at 93.85.

In Europe, it was reported that the IHS Markit Eurozone Manufacturing PMI decreased to 58.3 in October from September's final 58.6. Data signaled the weakest improvement in manufacturing sector conditions since February as supply-side issues interrupted production schedules. Production expanded the least in the current 16-month growth sequence and new business intakes grew at the weakest pace since January. Data showed that the Business Confidence In the Euro Area increased to 1.76 points in October from 1.72 points in September of 2021. The IHS Markit Eurozone Services PMI was down to 54.6 below September’s 56.4. The latest data pointed to the slowest growth in the services sector since April. New business growth slowed fractionally, although increased tourism and greater flexibility towards international travel reportedly boosted overseas demand. The consumer confidence indicator (Consumer ESI) in the Euro Area was confirmed at -4.8 in October 2021 from -4.0 in the previous month. The Consumer ESI measures consumer confidence on a scale between -100 to +100 where 0 indicates neutrality.

In Japan, data showed that the au Jibun Bank Japan Manufacturing PMI rose to 53.2 in October from 51.5 a month earlier. Both output and new orders reversed the declines recorded in September, buying activity rose for the seventh time in eight months following a drop in September, and employment continued to increase. The au Jibun Bank Japan Services PMI rose to 50.7 from 47.8 in the prior month. Data pointed to the first expansion in the service sector since January 2020. It was reported that the consumer confidence index in Japan rose to 39.2 from 37.8 in the previous month. Data pointed to the strongest point since May 2019, as the main sub-indices of income growth. A consumer confidence index score above 50 indicates optimism, below 50 shows lack of confidence, and 50 indicates neutrality.

NOVEMBER 2021

In the US, it was reported that the IHS Markit US Manufacturing PMI decreased to 58.3 in November from 58.4 in the previous month. The latest data pointed to the weakest pace of expansion in the manufacturing sector since December 2020 amid reports of near-record supply delays and slowing demand. Data showed that the IHS Markit US Services PMI decreased to 58.0 from 58.7 in October. Business activity and new orders continued to rise. Despite employment rising at the fastest pace since June, firms continued to struggle to work through backlog of work, which rose at the second-fastest pace on record. It was reported that the University of Michigan's consumer sentiment for the US decreased to 67.4 from the previous month’s figure 71.7. It was the lowest data point since November 2011.

In Europe, data showed that the IHS Markit Euro Area Manufacturing PMI increased to 58.4 from October’s 58.3. The latest data signaled the second-slowest expansion since February, struggling from severe supply-related constraints. Output increased faster, but the rate of increase remained the second-weakest in the current 17-month growth sequence. New order growth increased, while the pace of job creation remained solid. The IHS Markit Eurozone Services PMI rose to 55.9 from October’s final 54.6. Demand for services increased for a seventh straight month in November, although the expansion was the weakest over this period. New orders from foreign clients also rose, despite marginally. It was reported that Business Confidence In the Euro Area increased to 1.80 points in November from 1.75 points in October. The consumer confidence indicator (Consumer ESI) in the Euro Area was confirmed at -6.8 in November 2021 vs -4.8 in the previous month. The Consumer ESI measures consumer confidence on a scale between -100 to +100 where 0 indicates neutrality. This was the lowest data point since April 2021, reflecting a decrease in all its components.

In Japan, it was reported that the au Jibun Bank Japan Manufacturing PMI rose to 54.5 in November from 53.2 a month earlier. This was the tenth straight month of expansion in output activity and the strongest pace since January 2018, supported by vaccinations and easing COVID-19 curbs. The au Jibun Bank Japan Services PMI increased to 53.0 in November from 50.7 in the prior month. This was also the second straight month of expansion in services activity, lifted by easing COVID-19 restrictions and high vaccination rates. Output grew faster; while new orders returned to growth for the first time since January 2020. Data showed that the consumer confidence index in Japan stood at 39.2 in November, unchanged from the previous month. Still, the figure was the strongest data point since May 2019, as the main sub-indices of income growth and employment perceptions improved.

DECEMBER 2021

In the US, it was reported that the University of Michigan Index of Consumer Sentiment increased to 70.6 from November’s 67.4. The growth was supported by the expectation of higher income in the bottom third of the population distribution. This was due to higher wages for younger workers and a 5.9% increase in Social Security payments for 2022. Data showed that the IHS Markit US Manufacturing PMI decreased to 57.7 from November’s 58.3, still pointing to a strong expansion in factory activity. Data pointed to the softest rise in new orders for a year and a further substantial deterioration in vendor performance amid severe material shortages. The IHS Markit US Services PMI decreased to 57.6 from November's 58.0. The latest data signaled a sharp upturn in service sector business activity, despite the pace of growth easing to a three-month low, supported by strong client demand. The 10 year treasury yield increased to 1.51% in December from 1.44% in the previous month. On 27th December 2021, the U.S. Centers for Disease Control and Prevention (CDC) recommended shorter COVID-19 isolation and quarantine periods, cutting the time for people without symptoms and close contacts from 10 days to 5 days. Businesses continued to be disrupted by absences and restrictions especially the cruise industry that had just started returning to the seas in June 2021 after a months-long suspension of voyages caused by the pandemic.

In Europe, data showed that the IHS Markit Eurozone Manufacturing PMI decreased to 58.0 in December of 2021 from 58.4 in November. Despite manufacturers reporting a weakening of new order growth, December data recorded the largest expansion of production since September due to an easing of supply constraints. The pace of job creation accelerated to a four-month high. It was reported that the IHS Markit Eurozone Services PMI decreased to 53.1 from November's 55.9. The latest data pointed to the weakest pace of expansion in the service sector since April, as new order growth slowed to an eight-month low due to falling new business from foreign clients amid increasing COVID-19 infections. The consumer confidence indicator in the Euro Area fell to -8.3 from November’s -6.8. The Consumer ESI measures consumer confidence on a scale between -100 to +100 where 0 indicates neutrality.

In Japan, data showed that the au Jibun Bank Japan Manufacturing PMI decreased to 54.2 in December 2021 from 54.5 a month earlier. Though the data decreased marginally, this was the eleventh straight month of growth in factory activity, signaling a further solid improvement in business conditions following surging COVID-19 vaccinations across the country. Output, new orders, and new export orders grew further. It was reported that the au Jibun Bank Japan Services PMI decreased to 52.1 from the previous month’s 53.0. The latest data pointed to a moderate expansion in the sector. The consumer confidence index in Japan was at 39.1, a minor change from 39.2 in November. A consumer confidence index score above 50 indicates optimism, below 50 shows lack of confidence, and 50 indicates neutrality.

JANUARY 2022

In the US, in January, the IHS Markit US Manufacturing PMI decreased to 55.5 from the previous month’s 57.7. Demand conditions weakened further, with new orders rising at the slowest pace since September 2020. The slower rise in new orders allowed firms to partially work through backlogs of work, which expanded at the slowest pace for 11 months. Meanwhile, inflationary pressures remained marked. The rate of cost inflation eased to the softest for eight months. It was reported that the IHS Markit US Services PMI decreased to 51.2 from December’s 57.6. The spread of the omicron variant disrupted the upturn in new business and domestic and foreign demand conditions. Data showed that the University of Michigan consumer sentiment index for the US decreased to 67.2 from 70.6. Inflation expectations were confirmed at 4.9% for the year ahead and 3.1% for the next five years. The January employment report showed surprisingly strong jobs growth and higher-than-expected wage gains.

In Europe, in January, data showed that Business Confidence In the Euro Area increased to 1.81 points from 1.78 points in December. The IHS Markit Eurozone Services PMI decreased to 51.1 from December’s 53.1. The slow pace increase in business activity coincided with weaker new order growth. The improvement in demand was the softest seen across the current nine-month sequence of expansion. It was reported that the IHS Markit Eurozone Manufacturing PMI increased to 58.7 from the previous month's figure 58.0. Input price inflation was the lowest in nine months, but factory gate charges rose at the second-fastest pace in almost 20 years of data collection. Eurozone manufacturers appear to be weathering the Omicron better than prior COVID-19 waves so far. The consumer confidence indicator in the Euro Area fell to -8.5 from December’s -8.4. The Consumer ESI measures consumer confidence on a scale between -100 to +100 where 0 indicates neutrality.

In Japan, it was reported that the au Jibun Bank Japan Manufacturing PMI rose to 55.4 in January 2022 from 54.3 a month earlier. This was the strongest growth in factory activity since February 2014, amid surging vaccinations and despite pressure from a persistent chip shortage. Output grew at the fastest rate since February 2014, while new orders rose solidly, with the latter rising at the fastest pace for nine months. Both domestic demand and new export order growth accelerated. Data showed that the au Jibun Bank Japan Services PMI dropped to 47.6 from 52.1 in the previous month. The latest data marked the first contraction in services activity in four months and the steepest decline since August 2021. The consumer confidence index in Japan was at 36.7, a decrease from 39.1 in December. A consumer confidence index score above 50 indicates optimism, below 50 shows lack of confidence, and 50 indicates neutrality.

FEBRUARY 2022

In the US, in February, data showed that the IHS Markit US Manufacturing PMI increased to 57.3 from the previous month's figure of 55.5. The data pointed below the peaks seen in 2021 but signaled a stronger upturn in the health of the manufacturing sector, with stronger output and new order expansions contributing to overall growth. Stronger new sales growth urged manufacturers to increase staffing numbers and boost stocks of purchases. It was reported that the IHS Markit US Services PMI increased to 56.5 from 51.2 in January. Data pointed to strong growth in the services sector, following the easing of COVID-19 restrictions. Total new orders were also aided by a solid increase in foreign client demand. In line with improved demand conditions, firms expanded their workforce numbers at the fastest pace since last May. Data showed that the University of Michigan consumer sentiment for the US decreased to 62.8 from last month's figure of 67.2. The latest data pointed to the lowest level of consumer confidence in the past decade, amid inflationary declines in personal finances, a near-universal awareness of rising interest rates, falling confidence in the government's economic policies, and the most negative long-term prospects for the economy in the past decade.

In Europe, in February, it was reported that the IHS Markit Eurozone Manufacturing PMI decreased to 58.2 from January's final 58.7. The data was supported by the suppliers’ delivery times gauge (which is inverted in the calculation of the headline PMI), as the respective index recorded a notable increase since January. Employment growth was meanwhile stable, and stocks of purchases increased at a slightly weaker pace. Data showed that the IHS Markit Eurozone Services PMI increased to 55.5 from last month’s figure of 51.1. Data pointed to the strongest expansion in services output for three months and a notable turnaround from January’s nine-month low of 51.1. New orders and employment grew at faster rates than at the beginning of the year while volumes of outstanding business increased sharply, and backlogs accumulated to the strongest extent since last August. Business Confidence in the Euro Area decreased to 1.79 from 1.81 points in January. The consumer confidence indicator in the Euro Area decreased to -8.8 from last month’s -8.5. Data pointed to the lowest level since March 2021. The Consumer ESI measures consumer confidence on a scale between -100 to +100 where 0 indicates neutrality. In the European Union as a whole, consumer sentiment dropped by 0.2 points to -10.0, also the weakest in eleven months.

In Japan, in February, data showed that the au Jibun Bank Japan Manufacturing PMI decreased to 52.7 from 55.4 a month earlier. Data pointed to the weakest growth in factory activity since September 2021, amid renewed COVID-19 restrictions and ongoing supply chain disruptions. Output decreased for the first time in five months, while new orders growth eased and signaled a near-stagnation in growth. Purchasing activity growth eased to a three-month low. The rate of job creation slowed to the slowest since last November, with the rate of backlog accumulation the softest seen for 11 months. It was reported that the au Jibun Bank Japan Services PMI decreased to 44.2 from 47.6 in January. Both output and new orders decreased further with the rate of reduction the quickest for six months, and exports sales decreased at the quickest pace since last August. The consumer confidence index in Japan declined to a 9-month low of 35.3 from 36.7 in January. A consumer confidence index score above 50 indicates optimism, below 50 shows lack of confidence, and 50 indicates neutrality.

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