Short Cycle Tracker: headline numbers down but underlying data more resilient

研报英文原文证据摘录

Short Cycle Tracker: headline numbers down but underlying data more resilient

Executive Summary

The European manufacturing PMI stepped down slightly to 51.4 in June, from 51.6 in

May. However, the MoM step down was almost entirely driven by a lower increase in

delivery times, which is a positive development (index inverted) in our view since we

think that recent increases were driven by Iran-related supply chain disruptions. Both

New Orders (50.3) and Production (51.7) stepped up sequentially and were in positive

territory. More importantly, the input cost index has stepped back down from the May

peak, now at 73.7 (80.3 in May), with the lower inflation also supporting demand. We

think the data indicates that if the ceasefire in the Middle East holds then underlying

activity could improve slightly. The business confidence index has continued to step up

for the second consecutive month, now at 58.4 (from 57.4), but still below February’s

pre-war 64.1 level. We highlight that the survey results were prior to the ceasefire

announcement on June 17th, providing confidence on an improving trajectory from here

(albeit press reports suggested a high likelihood of de-escalation in the days leading up

to the formal agreement). While this is encouraging, we remain cautious EU short cycle

near-term, as we a risk that an unwind of previous stockpiling could slow down the pace

of the recovery into Q3. Accordingly, we are Underperform on SKF and Trelleborg. On

the other hand, we have Buy ratings on Kion and Jungheinrich as we see their low

valuation and warehouse automation exposure more favourably.

In the US, the headline S&P PMI was down MoM to 53.9 (from 55.1), with the ISM also

down MoM, to 53.3 (from 54.0). Most of the step-down was driven by a sharp dip in the