US ISM services rises to 53.5, growth across key subcomponents

    US ISM Services PMI climbed to 53.5 in February, up from 52.8 in January and exceeding expectations of 53.0. The data signaled continued expansion in the services sector, with growth seen across key subcomponents.

    Business activity showed only a marginal decline from 54.5 to 54.4. New orders ticked up from 51.3 to 52.2, while employment rose from 52.3 to 53.9. Price pressures remain a concern, as the prices subindex jumped from 60.4 to 62.6, reinforcing worries about inflation persistence.

    While the services sector continues to grow, ISM noted that businesses remain anxious over the impact of tariffs, while some respondents cited federal budget reductions as negatively affecting their outlook.

    Despite these uncertainties, ISM pointed out that February marked the third consecutive month where all four major subindexes—business activity, new orders, employment, and supplier deliveries—remained in expansion territory, a first since May 2022.

    The report also indicated that the current level of services activity corresponds to a 1.6% increase in annualized GDP.

    Full ISM services release here.

    US ADP jobs grow only 77, hiring slowdown

      US private sector employment growth slowed sharply in February, with ADP reporting an increase of just 77k jobs, far below market expectations of 140k.

      The breakdown showed that goods-producing sectors contributed 42k jobs, while service-providing sectors added only 36k. By company size, small businesses shed -12k jobs, while medium-sized firms led hiring with a 46k gain, followed by large businesses with a 37k increase.

      Wage growth showed little change, with job-changers seeing annual pay gains slow slightly from 6.8% to 6.7%, while job-stayers remained steady at 4.7%.

      ADP’s chief economist Nela Richardson attributed the hiring slowdown to “policy uncertainty and a slowdown in consumer spending,” which may have prompted layoffs or cautious hiring.

      Full US ADP employment release here.

      Eurozone PPI up 0.8% mom 1.8% yoy in Jan, above expectations.

        Eurozone producer prices rose sharply by 0.8% mom and 1.8% yoy in January, exceeding expectations of 0.3% mom and 1.4% yoy, respectively.

        The monthly increase in Eurozone PPI was primarily driven by a 1.7% mom jump in energy prices, while capital goods and durable consumer goods also saw notable gains of 0.7% mom and 0.6%, respectively. Intermediate goods prices edged up by 0.3% mom, while non-durable consumer goods saw a modest 0.2% mom rise.

        The broader EU also recorded a 0.8% mom, 1.8% yoy in producer prices. Among individual member states, Ireland saw the largest monthly price jump at 6.2%, followed by Bulgaria (+5.4%) and Sweden (+2.3%).

        However, not all countries experienced inflationary pressures, as Portugal (-2.2%), Austria (-0.6%), Slovenia (-0.5%), and Cyprus (-0.3%) registered price declines.

        Full Eurozone PPI release here.

        UK PMI services finalized at 51, stagflation risks grow

          The UK services sector showed little improvement in February, with PMI Services finalized at 51.0, slightly up from January’s 50.8 but still well below its long-run average of 54.3. Meanwhile, PMI Composite edged lower from 50.6 to 50.5, signaling stagnant overall economic activity as demand conditions continue to weaken both domestically and in export markets.

          Tim Moore, Economics Director at S&P Global Market Intelligence, warned of “elevated risk of stagflation on the horizon”. New orders falling at their sharpest rate in over two years. Rising payroll costs and economic uncertainty have eroded business confidence, bringing sentiment to its lowest level since December 2022.

          Concerns over slowing growth and persistent inflation pressures have also led to continued job losses, with employment in the services sector contracting for a fifth straight month—the longest period of decline outside of the pandemic since early 2011.

          Full UK PMI services final release here.

          Eurozone PMI composite finalized at 50.2, barely grow for two months

            Eurozone economy showed little momentum in February, with PMI Services finalizing at 50.6, down from 51.3 in January, while PMI Composite was unchanged at 50.2.

            The picture was mixed across the region with Spain, Ireland, and Italy showing signs of expansion, while Germany’s services sector slowed and France’s continued its sharp contraction, posting its lowest reading in 13 months at 45.1.

            Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, noted that services growth is barely offsetting the prolonged slump in manufacturing. He pointed to rising input costs, particularly wage pressures, as a growing concern for ECB.

            Political uncertainty in key economies is also weighing on sentiment. France’s services sector is deteriorating at a much faster pace, likely influenced by unresolved political instability. In contrast, Germany’s services sector, though slowing, remains in expansion, with hopes that post-election stability could support economic recovery.

            However, with external risks from trade tensions and weak consumer spending, a decisive rebound in Eurozone remains uncertain.

            Full Eurozone PMI services final release here.

            Swiss annual CPI ticks down to 0.3% yoy, remains weak

              Swiss inflation accelerated on a monthly basis in February, with CPI rising 0.6% mom, slightly above the expected 0.5%. Core CPI, which excludes fresh and seasonal products, energy, and fuel, increased by 0.7% mom. The rise was driven by both domestic and imported product prices, which climbed 0.5% mom and 0.9% mom, respectively.

              However, the broader inflation trend remains subdued. On a year-over-year basis, headline CPI slowed to 0.3% yoy from 0.4% yoy, though it was still slightly above expectations of 0.2% yoy. Core CPI remained steady at 0.9% yoy. While domestic product price inflation eased from 1.0% yoy to 0.9% yoy, imported prices continued to contract, staying at -1.5% yoy.

              Full Swiss CPI release here.

              China’s Caixin PMI services rises to 5.14, but uncertainties rising in employment and income

                China’s Caixin Services PMI climbed to 51.4 in February, up from 51.0, beating market expectations of 50.8. Composite PMI also improved slightly to 51.5, signaling steady expansion across both manufacturing and services for the 16th consecutive month.

                According to Wang Zhe, Senior Economist at Caixin Insight Group, supply and demand showed improvement in both sectors, supported by robust consumption during the Chinese New Year holiday and technological innovations in select industries. However, “employment saw a slight contraction”, mainly due to weakness in the manufacturing sector.

                Concerns remain over China’s broader economic recovery. Wang noted that overall price levels “remained subdued”, with declining sales prices in both manufacturing and services. “Rising uncertainties in employment and household income constraining efforts to boost domestic demand and stabilize the economy,” he added.

                Full China Caixin PMI services release here.

                BoJ’s Uchida: Interest rate to gradually approach neutral by late FY 2025 to FY 2026

                  BoJ Deputy Governor Shinichi Uchida reinforced today that interest rates will continue to rise if the bank’s economic projections hold. He highlighted in a speech that BoJ expects inflation to stabilize around the 2% target in the second half of fiscal 2025 to fiscal 2026, with “effects of the cost-push wane” while underlying inflation strengthens with wages growth.

                  “The policy interest rate at that time is considered to approach an interest rate level that is neutral to economic activity and prices,” he added.

                  However, Uchida acknowledged that determining the “neutral” interest rate level remains uncertain. While in theory, it should be around 2% plus Japan’s natural rate of interest, estimates for the latter vary significantly from -1% to +0.5%.

                  Given this wide range and estimation errors, BoJ will avoid relying solely on theoretical models and instead “examine the response of economic activity and prices as it raises the policy interest rate”

                  Full speech of BoJ’s Uchida here.

                  Japan’s PMI service finalized at 53.7, sector strengthens but confidence wanes on labor shortages and trade risks

                    Japan’s PMI Services was finalized at 53.7 in February, up from January’s 53.0, marking a six-month high. PMI Composite also improved from 51.1 to 52.0, the strongest reading since September 2024.

                    According to Usamah Bhatti, Economist at S&P Global Market Intelligence, service sector businesses saw higher sales volumes, with export demand contributing to the expansion. Meanwhile, the broader private sector recorded its steepest rise in activity in five months, supported by a milder contraction in manufacturing.

                    Despite the growth, overall business confidence showed signs of softening. Bhatti noted Firms expressed concerns over labor shortages and uncertainty stemming from US trade policies, leading to the weakest sentiment since January 2021.

                    Full Japan PMI final release here.

                    RBA’s Hauser: Uncertain on further easing disputes market’s rate-cut outlook

                      RBA Deputy Governor Andrew Hauser emphasized in a speech today that monetary policy is set to ensure inflation returns to the midpoint of the target range, which is crucial for maintaining price stability over the long run.

                      He justified the February rate cut, stating that it “reduces the risks of inflation undershooting that midpoint.”

                      However, Hauser pushed back against market expectations of a sustained easing cycle, saying the “Board does not currently share the market’s confidence that a sequence of further cuts will be required”.

                      While Hauser acknowledged that interest rates will go where they need to go to balance inflation control with full employment, he made it clear that progress so far does not warrant complacency.

                      He stressed that RBA will continue to assess economic developments on a “meeting by meeting” basis.

                      Full speech of RBA’s Hauser here.

                      Australia’s GDP grows 0.6% qoq in Q4, ending per capita contraction streak

                        Australia’s GDP grew by 0.6% qoq in Q4, exceeding expectations of 0.5% qoq, while annual growth stood at 1.3% yoy. A key highlight was the 0.1% qoq per capita GDP growth, marking the first increase after seven consecutive quarters of contraction.

                        According to Katherine Keenan, head of national accounts at the ABS, “Modest growth was seen broadly across the economy this quarter.” She noted that both public and private spending contributed positively, alongside a rise in exports of goods and services.

                        Full Australia GDP release here.

                        Fed’s Williams: Tariff adds to inflation risks, no rush for rate cuts

                          New York Fed President John Williams acknowledged that tariffs could contribute to inflation pressures later this year, noting that consumer goods could likely see immediate price increases while other sectors may experience a more gradual impact.

                          However, he emphasized the high level of uncertainty surrounding trade policies, stating, “We don’t know how long the tariffs will apply. We don’t know what other countries may do in response to this.”

                          Beyond tariffs, Williams pointed out that fiscal and regulatory policies under the Trump administration would also play a key role in shaping the economic outlook and monetary policy decisions.

                          Williams also reiterated that the current policy stance remains appropriate. “I think the current place for policy is good. I don’t see any need to change it right away,” he noted.

                          While acknowledging that rate cuts could be a possibility later this year, he was noncommittal, adding that it’s “really hard to know” if further easing will be necessary.

                          Eurozone unemployment rate unchanged at 6.2% in Jan

                            Eurozone unemployment rate was unchanged at 6.2% in January, coming in better than expectations of 6.3%. Across the broader EU, unemployment rate also held firm at 5.8%.

                            According to Eurostat, the number of unemployed individuals stood at 12.824 million in the EU, of which 10.655 million were in the Eurozone.

                            On a monthly basis, Eurozone unemployment fell by -42k, while the overall EU saw a more modest decline of -8k.

                            Full Eurozone unemployment release here.

                            S&P 500 sinks as US tariffs on Canada, Mexico, and China set to begin

                              US equities tumbled sharply on Monday, kicking off March with the biggest single-day decline in months, and the markets were rattled by the formal commencement of a US-led trade war.

                              The selloff started in the afternoon after US President Donald Trump reaffirmed that 25% tariffs on imports from Mexico and Canada would go into effect as scheduled on Tuesday. Hopes for a last-minute deal to avert the full imposition of tariffs were dashed. The Federal Register confirmed that the new duties would be officially imposed at 05:01 GMT.

                              Similarly, the additional 10% duty on Chinese goods was also slated to take effect at the same time, effectively raising the total tariff on thousands of Chinese products to 20%.

                              In quick response, Canada announced retaliatory measures, with Prime Minister Justin Trudeau confirming that CAD 155B worth of US goods would be hit with 25% tariffs if Trump’s levies proceed as planned. China’s commerce ministry also vowed countermeasures, calling the US tariffs “unreasonable and groundless, harmful to others.”

                              Technically, S&P 500’s rejection by 55 D EMA (now at 5988.77) is a near term bearish sign. Immediate focus is on 5773.31 support this week. Considering bearish divergence condition in D MACD, firm break of 5773.31 should confirm medium term topping that 6147.47. That would set up deeper correction to 55 W EMA (now at 5594.28) at least.

                               

                              Australia retail sales rises 0.3% mom, driving by food-related spending

                                Australia’s retail sales turnover rose 0.3% mom to AUD 37.08B in January, matched expectations.

                                Robert Ewing, ABS head of business statistics, said: “While the pick-up in retail spending since mid-2024 has been boosted by more discretionary spending, this month’s rise is mostly driven by food-related spending.”

                                Full Australia retail sales release here.

                                RBA minutes: No commitment to further rate cuts

                                  The minutes from RBA’s February meeting reinforced the central bank’s cautious approach to monetary easing, making it clear that the recent 25bps rate cut to 4.10% does “not commit them to further reductions” in subsequent meetings.

                                  Policymakers acknowledged that inflation has been falling at a “somewhat faster pace than expected,” which helped ease concerns over upside risks. However, they stressed that the path to returning inflation to target while maintaining labor market gains is “not yet assured.” The Board ultimately deemed that the stronger case was to ease policy, given the downside risks to the economy.

                                  Despite the decision to cut, RBA members debated the risks of “easing policy too soon”, recognizing that a premature policy shift could lead to resurgence in inflation.

                                  They noted that if inflation proved “more persistent than expected,” holding the cash rate at 4.1% for an “extended period” or even tightening policy would be warranted.

                                  Full RBA minutes here.

                                  US ISM manufacturing falls to 50.3, tariff pressures mount

                                    US ISM Manufacturing PMI slipped to 50.3 in February, down from 50.9, missing expectations of 50.8. The biggest red flag in the report was the sharp drop in new orders, which plunged from 55.1 to 48.6, marking a return to contraction after three months of growth. Production slowed to 50.7 from 52.5. Employment also fell back into contraction at 47.6 after briefly expanding in January. The figures suggest that while manufacturing activity remains in expansion territory, momentum is weakening.

                                    One key concern is the rapid acceleration in price growth, with the Prices Index surging from 54.9 to 62.4. According to ISM, this reflects the initial shock of the new administration’s tariff policies, which have disrupted supply chains, caused new order backlogs, and led to supplier delivery stoppages.

                                    Despite the decline in overall activity, ISM noted that the February reading still signals a 2.2% annualized growth in US GDP.

                                    Full US ISM manufacturing release here.

                                    Eurozone CPI falls to 2.4%, core CPI slows to 2.6%, both above expectations

                                      Eurozone CPI ticked down from 2.5% yoy to 2.4% yoy in February, above expectation of 2.3% yoy. Core CPI (ex-energy, food, alcohol & tobacco), fell from 2.7% yoy to 2.6% yoy, above expectation of 2.5% yoy.

                                      Looking at the main components of inflation, services is expected to have the highest annual rate in February (3.7%, compared with 3.9% in January), followed by food, alcohol & tobacco (2.7%, compared with 2.3% in January), non-energy industrial goods (0.6%, compared with 0.5% in January) and energy (0.2%, compared with 1.9% in January).

                                      Full Eurozone CPI flash release here.

                                      UK PMI manufacturing finalized at 46.9, job cuts accelerate

                                        The UK manufacturing sector continued to struggle in February, with PMI Manufacturing finalized at 46.9, down from January’s 48.3, marking a 14-month low. Weak demand and declining confidence among clients have exacerbated the downturn, leading to falling output and new orders.

                                        Rob Dobson, Director at S&P Global Market Intelligence, noted that UK manufacturers are facing an “increasingly difficult trading environment.” The combination of subdued demand, rising cost pressures, and uncertainty over future economic conditions is making it harder for firms to sustain growth.

                                        Inflation fears are also rising, particularly due to changes in the national minimum wage and employer NICs announced in the Autumn Budget.

                                        One of the most concerning trends is the acceleration in job losses. The pace of staff reductions in the sector is now at levels not seen since the pandemic-induced slump in mid-2020.

                                        Full UK PMI manufacturing final release here.

                                        Eurozone PMI manufacturing finalized at 47.6, a 24-mth high

                                          Eurozone manufacturing activity showed signs of stabilization in February, with PMI finalized at 47.6, a 24-month high, up from January’s 46.6. While still in contraction territory, the improvement offers some hope that the sector may be finding its footing.

                                          Among individual countries, Ireland led the rankings at 51.9, marking a 12-month high, while the Netherlands reached the neutral 50.0 mark for the first time in eight months. However, Spain dipped to a 13-month low at 49.7, and Italy, Austria, Germany, and France all remained below 50, despite showing some improvement.

                                          Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, emphasized that while the data is encouraging, it’s “too early to call it a recovery”. New orders are still falling but at the slowest rate since May 2022, and production is inching closer to stabilization. After nearly three years of recession, there is potential for modest growth in the coming months.

                                          Despite ongoing risks, most businesses remain optimistic about the future, with confidence slightly above its long-term average. This resilience is notable, given the looming threat of US tariffs. Additional positive factors include hopes that Russia’s war in Ukraine could come to an end this year, alongside expectations of greater political stability in Germany following the recent elections.

                                          Full Eurozone PMI manufacturing final release here.