G3 Recap 6-1-11

Main Items:

  • US ADP Employment declined to 38k in May vs 175k expected and 179k previously
  • US ISM Manufacturing dropped to 53.5 in May vs 57.1 expected and 60.4 previously


  • EU PMI Manufacturing was revised lower to 54.6 vs 54.8 after weaker than expected Italian prints and German revisions.
  • UK PMI Manufacturing declined to 52.1 vs 54.1 expected and 54.6 previously
  • China PMI Manufacturing declined to 52 in May vs 51.6 expected and 52.9 previously. The HSBC measure declined to 51.7 vs 51.8 previously
  • South Korea HSBC Manufacturing PMI declined to 51.2 in May vs 51.7 previously
  • South Korea CPI rose 4.1% YoY in May vs 4.2% expected and previously
  • Australian GDP declined -1.2% QoQ in 1Q vs -1.1% expected and +0.7% previously


  • And the growth scare is on! ADP printed at the lowest level since last September, and only just above. ISM dropped to the lowest level since Sept 2009 and the most in a month since 1984.

    Of course, one can point to a number of one off items driving this: Japan affecting the global supply chain, higher oil price, and storms and floods across the US. While they have all had an impact, the key factor is that growth expectations probably have not come down enough to match the likely upcoming macro data. Currently, 2011 growth is still expected to print 2.7%. While this is well off the highs of 3.2% from March, it is still a ways off the lows of 2.4% seen at the end of Q3 last year:

    As a result, even though speculative positioning in pro-risk assets are neutral or even negative, risk assets may have further room to fall – especially since negative data surprises have accelerated as of late: