Euro Area composite PMI at 17-month low

Financial Markets
Nigeria’s shares rose for a third day on Thursday to their highest levels in nearly 9 months, supported by
local investments being switched from the bond market to stocks following the end of the country’s
currency peg on June 20. The Nigerian Stock Exchange All Share index rallied 3.1 percent to extend its
three-day gain to 8 percent, the most among major equity indexes worldwide. Meanwhile, the country’s
currency, which dropped 30 percent on the first day it floated freely, fell 0.5 percent to 283 against the
dollar. Separately, Fitch Ratings downgraded Nigeria’s credit rating to ‘B+’ from ‘BB-‘, citing the country’s
fiscal and external vulnerability.

Global equities rallied, while safe-haven assets declined on Thursday as investors speculated that the
U.K. will vote to remain in the European Union. Europe’s Stoxx 600 index rose 1.5 percent, its strongest
closing since May 31, while the U.S.’s S&P 500 index gained 0.9 percent in mid-day session. In
contrast, the safest government bonds retreated, paring gains that earlier this months pushed yields from
Japan and Switzerland to record lows. The Japanese yen weakened more than 1 percent versus its
major counterparts as safe-haven refuge demand waned.


Advanced Markets
U.S. flash Markit manufacturing purchasing manager’s index (PMI) came in at 51.4 in June, up from 50.7
in May, and above the market expectations of 50.8 (a figure above 50 indicates expansion), pointing to a
recovery in the growth momentum. The increase in activity was buoyed by a rise in new business growth
supported by a surge in production and new export orders. Separately, initial jobless claims fell by 18,000
to 259,000 in the week ended June 18th, lower than last week’s reading of 277,000, and below the market
expectations of 270,000, hitting its lowest level in eight weeks.

The Euro Area flash Markit composite (manufacturing and services) PMI eased to 52.8 in June, from 53.1
in May, and below the economists’ expectation of a reading of 53, suggesting steady although lackluster
growth activity in the region. It was the lowest reading since January 2015, as an acceleration in
manufacturing was offset by weakened pace of expansion in services. In addition, the firms’ business
outlook deteriorated due to uncertainty. Germany’s composite PMI came in at 54.1 in June, moderating
from the 54.5 registered in May but broadly in line with a 38-month expansion streak, led by acceleration
in manufacturing sector, but was offset by subdued activity in services. France’s composite PMI edged
down to 49.4 in June, from 50.9 in May, with manufacturing activity contracting for the third month due to
a reduction in new business orders and disruptions caused by the union-led public strikes, while services
stagnated.

Japan’s flash Nikkei/Markit manufacturing PMI edged slightly up to 47.8 in June, from 47.7 in May. This is
the fourth successive month of contraction in the manufacturing activity, attributed to a decline in
production and new orders due to weak export orders as a result of strengthening of the yen and weak
external demand, and persistence of the after-effects of the earthquake in the Kyushu prefectures in April.


Emerging and Developing Economies

                                                     1
East Asia and Pacific

The central bank of Philippines kept its benchmark overnight borrowing rate unchanged at 3 percent, after
shifting to an interest rate corridor system of 100bps on June 3rd. The interest rates on short-term special
deposit accounts (SDA) and overnight repo rate were also kept steady at 2.5 percent and 3.5 percent,
respectively.


Europe and Central Asia

Ukraine’s unemployment rate rose to 10.3 percent in Q1 from 9.9 percent in Q4. It was the highest rate
since Q4 2014, as the number of unemployed people rose by 61,000 to 1.8 million and the employed fell
by 314,000 thousand to 15.4 million. The economic activity rate declined to 70.6 percent from 71.0
percent in Q4. Meanwhile, the central bank of Ukraine lowered its benchmark interest rate by 150 bps to
16.5 percent.


Latin America and the Caribbean

Mexican economic activity rose 3 percent (y/y) in April, after the 1.2 percent increase in March. Growth
was broad based, with output expansions in agriculture, industry and services. However, on a monthly
basis, economic activity slumped 1.2 percent, after shrinking 0.2 percent in March and stalling in
February.


Sub-Saharan Africa

Following an economic review of the drought-hit country, the International Monetary Fund (IMF) will
increase loans to Malawi by $76.8 million. The IMF will also be augmenting Malawi's Extended Credit
Facility (ECF) arrangement, signed in 2012, by another six months with funding equivalent to $49.2
million.

June 23, 2016



The Global Daily is an informal briefing on global economic and financial developments compiled by the
World Bank’s Development Economics Prospects Group. Recent issues, together with analysis of a
variety of macroeconomic topics, covered by the Group, may be found at:
 http://www.worldbank.org/prospects.

The views expressed in the Global Daily do not necessarily reflect those of The World Bank Group, its
Board of Executive Directors, or the governments they represent. Feedback and requests to be added to
or dropped from the distribution list may be sent to: Derek Chen (dchen2@worldbank.org).




                                                     2