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Sense and sentimentality

| Posted by: Paul Donovan | Tags: Paul Donovan

  • Today is pretty much wall to wall manufacturing sentiment. Which is a bit of a problem. There is evidence that sentiment data is increasingly influenced by the media rather than reality, and this raises the issue of overreaction in the figures
  • There is also a problem with real versus nominal distinctions in sentiment data. This can be a particular issue when there are significant currency movements, as the value of external trade (but not the volume) is likely to be affected.
  • Chinese PMI manufacturing sentiment showed stability. The Euro area data may be affected by the movements in the Euro throughout May. The strength of the domestic economy should come through.
  • Aside from the headline in the US ISM survey it may be worth looking at the detail on prices. The rise in inflation in the US has been skewed towards service sector prices, indicating a relative shift in pricing power that is not to manufacturers' advantage.