Deeper Analysis

U.S. and Euro Area Non-Manufacturing Business Conditions Each Improved Less Rapidly in October than September

November 6, 2018

Service sector activity in the euro area and non-manufacturing activity in the United States continued to expand last month but at a somewhat less robust pace than in September. This development paralleled the trend told by manufacturing purchasing manager indices released earlier this month. The right-most column in the table below, which adds the two […] More

Next Week

November 2, 2018

Central Banks: Monetary policy reviews scheduled at the Federal Reserve and in Australia, New Zealand, Poland, Romania, Serbia, Malaysia and Peru. BOJ Governor Kuroda and ECB Vice President Guindos speak publicly. Minutes from the Bank of Japan’s September Board meeting and a summary of its end-October meeting, plus the Reserve Bank of Australia’s quarterly Monetary […] More

U.S. Manufacturing Advantage Over Euro Area Narrowed but Remained Big in October

November 2, 2018

The differential between the ISM-compiled U.S. manufacturing purchasing managers index and the IHS-compiled Euroland factory PMI narrowed last month to +5.7 from +6.6 in September and +6.7 in August. The dollar’s average value was about 1.5% stronger than its September mean, but concerns about U.S. trade protectionism resulted in Euroland’s weakest business confidence in the […] More

October in Figures

November 1, 2018

October was a¬†broadly strong month for the dollar but a bad one for global equities. Monetary policy rates did not change this past month in the U.S., Euroland, Japan, Great Britain or Switzerland, but 10-year sovereign debt yields rose in North America while falling in Europe, and staying unchanged in Japan. The price of West […] More

U.S. GDP Report Deconstructed

October 26, 2018

Good News: Real GDP expanded by a somewhat greater-than-expected 3.5% between 2Q and 3Q, expressed at an annualized rate (SAAR). The two-quarter pace of 3.8% was the fastest since the middle two quarters of 2014, when a 5.0% pace was achieved. On-year growth of 3.0% was the most in 13 quarters and just 0.8 percentage […] More

Three Risks When Political Leaders Influence Monetary Policy

October 17, 2018

President Trump’s progressively blunt criticism of the Federal Reserve for a string of gradual interest rate hikes should surprise nobody. The president’s style of overturning institutions¬† has taken him very far in politics. Criticizing Fed policy, even though the Chairman and two of the other current governors are his appointees, fits a pattern that has […] More

Spread Widens Between U.S. Non-Manufacturing PMI and Euroland’s Services PMI

October 3, 2018

The ISM-compiled U.S. non-manufacturing purchasing managers index rose 3.1 points in September to 61.6, which is a record high for this 10-year-old data series. Sub-indices for business activity/production and for jobs climbed by 4.5 points and 5.7 points, while those for prices and new business were 1.4 and 1.2 points above their August readings. The […] More

Trade War Concerns Affected U.S. and Euroland Manufacturing Purchasing Manager Indices Equally in September

October 1, 2018

In September, the ISM-Compiled factory PMI index fell 1.5 points to 61.3, while the IHS-compiled euro area PMI dropped 1.4 points to 54.6. The manufacturing sectors continued to improve, but the lower scores in each economy reflects a reduced rate of improvement in operating conditions. And America’s relative advantage was preserved, but the data do […] More

September and Third Quarter in Figures

September 29, 2018

Central bank policy rates were raised during the third quarter in the United States, U.K., and Canada but left unchanged in Japan, Switzerland and Euroland. Nevertheless, long-term interest rates climbed noticeably in all six of those economies. Thus, 10-year differentials between the U.S. and the other countries didn’t shift all that much. Moreover, the squeeze […] More

U.S. and Euroland Manufacturing Conditions Diverge

September 4, 2018

August saw the widest divergence that I can recall between U.S. factory conditions as measured by the ISM purchasing managers index and factory conditions in the euro area as measured by the IHS PMI. But there is a caveat. IHS also compiles a U.S. manufacturing PMI, and according to that measure, there was a deceleration […] More

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