This is the week when the U.S. Non-Farm Payroll numbers come out on Friday. The second half of the week packs some important economic reports but the first half also had some impactful events. Here is the mid-week economic review of major events.

China Is Still Sulking

On Sunday evening (East-Coast time), Chinese HSBC Final Manufacturing PMI came out at 49.7. The Flash PMI was 49.8 on January 22, 2015. It is a survey of about 430 purchasing managers covering the current levels of employment, production etc. A reading above 50 indicates industry expansion and below a contraction. Since 2011, the PMI is hovering just above or below 50, which means that Chinese economy is losing steam.

China’s HSBC Services PMI for January was 51.8 compared to last month’s reading of 53.4 and forecast of 52.8. The HSBC Composite PMI came at 51.0 versus 51.4 for last month.

Japan’s Final Manufacturing PMI, on the other hand, came inline at 52.2, showing a slight expansion in business activities. Japan’s Average Cash Earnings y/y rose by +1.6% in January compared to +0.1% y/y change last month. This is the change in total value of employment income collected by workers.

RBA Aims And Fires In One Go

The slow-down in China is impacting Australia too. Its AIG Manufacturing Index came at 49. This is a survey of manufacturers and a reading below 50 indicates contraction in manufacturing activities. Australia’s MI Inflation Gauge m/m was +0.1%, showing disinflationary pressures.

Australia’s Commodity Prices declined by -20.4 y/y. This is the selling price of exported commodities. This does raise concerns about the global deflationary pressures.

The Building Approvals for the month of January fell by -3.3% on month-over-month basis. It is better than the forecast but still reflects slowing conditions. Australia’ Trade Balance for the month of January came at -0.44B. It is better than forecast but it is not a good sign for a commodity exporting economy.

Royal Bank of Australia assessed the impact of all these reports to be not very good for the economy and it unexpectedly cut the benchmark Cash Rate by 25 basis point 2.25%. RBA last cut rate on July 1, 2013. This is the lowest rate so far.

New Zealand q/q Employment Change was +1.2%, better than the forecast of +0.8% and last month’s reading of +0.9%. But, the unemployment rate ticked up to 5.7% from 5.4%.

PMI Galore In Europe – Not A Bad Picture

Swiss Manufacturing PMI for January came at 48.2 below the forecast of 54.5. Swiss Trade Balance for January also came below the forecast. The actual number was 1.52B whereas the market was expecting 2.17B. Perhaps the SNB’s euro-peg removal depressed the manufacturing activities.

However, other countries had better PMI numbers. Italy reported 49.9 for its Manufacturing PMI, which is in contraction territory but better than the forecast of 49.3 and last month’s reading of 48.4. Italy’s Services PMI, at 51.2, also came better than the expectations of 49.9 and last month’s 49.4. At least this is showing an expansion for services sector.

On Monday, Spain’s Manufacturing PMI reported an expansion at 54.7 versus the forecast of 54.2. On Wednesday, the Services PMI, at 56.7, also beat the forecast of 54.5.

Spain’s Unemployment Count Change was 78.0K, better than the forecast of 83.0K. Over the years the unemployment count in Spain has decreased though the unemployment rate is still very high.

Euro Zone Retail Sales, on Wednesday, beat the forecast. The actual m/m growth was +0.3% and the forecast was a contraction of -0.1%. Last month’s number was also revised up to +0.7% from +0.6%. Retails Sales y/y growth was 2.4%, however, the total sales numbers are still below pre-crisis level.

U.K. also reported above 50 numbers, at 53.0, for Manufacturing PMI. Country’s Services PMI also beat the forecast. The actual number was 57.2, whereas the market was expecting 56.6 and last month it was 55.8.

UK’s Construction PMI, at 59.1, also beat the forecast of 56.9 and last month’s reading of 57.6.

North America – Some Up, Some Down

On Tuesday, Canada reported RMPI m/m change  -7.6% for January. This is the change in price of raw materials purchased by manufacturers. January’s reading is better than the forecast of -8.8% but worse than last month’s -5.7%. And, it also shows that the deflationary pressures are active.

On Wednesday, Canada’s Ivey PMI massively missed the mark. It came at 45.4 compared to expectation of 53.8 and last month’s reading of 55.4.

U.S. Core PCE Price Index m/m came in line at 0.0%. This is the change in price of goods and serviced purchased by consumers excluding food and energy. The year/year change is 1.41%, much below Fed’s 2% inflation target and there is no sign of it reaching there soon.

Personal Spending m/m was at -0.3%, below the forecast of -0.1% and last month’s +0.5%. But Personal Income m/m, at +0.3%, was better than the forecast of +0.2% but same as last month’s reading.

The ISM Manufacturing PMI was at 53.5, below the forecast of 54.9 and last month’s 55.5. Overall the recent data raises some concerns for the modestly improving U.S. economy. In this environment, some are questioning Fed’s telegraphed intentions to raise the rates by mid-year.

Wednesday’s ISM Non-Manufacturing PMI muddied the water a bit. It came in line at 56.7 better than last month’s 52.2. This is showing expansion.

The ADP Non-Farm Employment Change, +213K, disappointed the market, which was expecting +224K. However, ADP revised up December’s count to +253K from +241K. It also does not give much indication for Friday’s Bureau of Labor’s Non-Farm Payroll report.

Overall Picture – Cautiously Hopeful

As usual the collection of this week’s economic reports are mixed. Some are good for their economy and some bad. The troubled economies of Europe are showing some kind of green-shoot. But, one constant theme is that the none of the economies is in rip-roaring stage and the deflationary pressures are in all of them.

Second half of the week also packs in some important events including trade balances from USA and Canada, rate decision from BoE, RBA’s Monetary Policy Statement, German Factory Orders and employment related reports from USA and Canada.