First Look at September Purchasing Manager Surveys

September 23, 2015

The dollar lost 0.3% against the euro overnight but gained 0.5% versus the Australian dollar, 0.4% vis-a-vis sterling and 0.1% relative to the yen, Swissie and yuan.  The loonie edged 0.1% higher.

In the wake of Tuesday’s U.S. stock sell-off and following a disappointing Chinese manufacturing PMI, the Shanghai Composite index dropped 2.2%, and equities fell by 2.3% in Indonesia, 2.6% in Hong Kong, 2.1% in Australia, 1.4% in New Zealand, 1.9% in South Korea and 0.8% in Singapore.

Japan remained closed for a third straight business day due to the Autumn Equinox Holiday.

While Greek share prices dropped another 1.4%, other European stock markets rebounded by 1.4% in the U.K., 1.2% in Italy, 0.7% in France and Germany, 0.4% in Switzerland and 0.2% in Spain.

West Texas Intermediate oil climbed 0.7% to $46.69 per barrel.  Comex gold edged up 0.1% to $1,125.33 per ounce.

Ten-year German bund and British gilt yields are a basis point higher.

China’s manufacturing purchasing managers index fell 0.3 points to 47.0 this month.  This was the seventh straight sub-50 result and indicated the fastest rate of contraction since March 2009.  China is undergoing a structural restructuring in which manufacturing will play a diminished role.  Both orders and jobs fell at a quickening pace in September.

Euroland’s composite PMI slipped 0.4 points to a 2-month low of 53.9.  The 3Q average score of 54.0 was the best quarter since 2Q11, suggesting that GDP  advanced around 0.4% last quarter.  Services dipped 0.4 to a 2-month low, and manufacturing fell 0.3 points to a 5-month low.  The outcome was close to expectations and provide reassurance that financial turmoil has not so far caused the European economy to become unglued.

The German composite PMI dropped 0.7 points, a bit more than forecast, to 54.3.  It, along with the services and the manufacturing PMI indices, were at 2-month lows. The data would be consistent with 0.4% quarter-on-quarter GDP expansion.

The French composite PMI rose 1.2 points but only to 51.4, which suggests 3Q growth of only about 0.1%.  The manufacturing and services PMI scores of 50.4 and 51.2 constitute 3- and 2-month highs.

French GDP stagnated in the second quarter according to revised figures.  GDP had risen 0.7% in the first quarter, but quarterly growth ranged from negative 0.2% to +0.2% in the six quarters through 4Q14.  GDP grew 1.1% between the second quarter of 2014 and 2Q15.

Australia’s index of leading economic indicators (LEI) went up 0.3% in July, the first rise since February.  India’s LEI fell 0.7% in August.  Those outcomes were associated with a 0.2% increase in Australia’s index of coincident economic indicators (CEI) and a 0.3% drop in India’s CEI.

CPI deflation doubled in Singapore to an on-year consumer price drop of 0.8% in August.  Malaysian consumer prices increased 3.1% in the year to August.

South African CPI inflation slowed more than expected to 4.6% last month from 5.0% in July.  The PPI increased 3.4% in the year to August.

Dutch GDP growth in 2Q was revised upward to 0.2% from 0.1% but remained much weaker than the first-quarter pace of 0.6%.  The Dutch current account surplus was squeezed by a drop in energy prices, falling to EUR 16.5 billion in 2Q from EUR 22.4 billion in 1Q.

Norwegian unemployment averaged a lower 4.3% in May-July.  Polish unemployment of 10.0% in August compared with 10.1% in July and 11.7% in August 2014.

Canada and Mexico release retail sales today.  Markit Economics’ U.S. manufacturing preliminary PMI survey gets reported, too, as do U.S. weekly oil inventories.

The South African Reserve Bank is holding an interest rate policy meeting today.  Tomorrow it will be the turn of central banks in Norway, The Philippines, and the Czech Republic.  ECB president Draghi speaks publicly today, and Federal Reserve Chair Yellen will do so tomorrow.

Copyright 2015, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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