New Month… Same Worrisome News

September 1, 2011

Euroland purchasing managers index for August in manufacturing was revised to 49.0 from 49.7 preliminary indication and July reading of 50.4.  Result elicits warning that regional economy could enter recession before yearend.  Germany PMI was revised to 50.9 from 52.0, and the French index of 49.1 was marked down from 49.3.  Italy’s index slumped 3.1 points to 47.0.  With readings well below 50, Spain (45.3) and Greece (43.3) contracted sharply.  Ireland’s 49.7 score was 1.5 points better than in July but still under 50 breakeven line.  The Dutch (50.7) and Austrian (50.1) readings barely exceeded 50. 

Britain’s PMI of 49.0 constituted a 26-month low.  As recently as April, manufacturing was doing fine with a reading of 54.4

The Swiss PMI sank near to a two-year low with a reading of 51.7 after 53.5 in July and 53.4 in June.  Sweden’s index swung below 50 to 48.7 from 50.1 in July and 52.9 in June.  Norway’s PMI fell 1.1 to 55.5.  Denmark’s dropped to 54.4 from 55.3. 

Australia’s PMI in manufacturing remained very depressed at 43.3 after 43.4 in July.  Canada’s PMI in manufacturing was 54.9, an improvement from 53.1 in July.

Among Eastern European economies, Russia’s index ticked up a tenth to 49.9.  The Czech index held steady at an 18-month low of 53.4.  Poland’s PMI dropped by 1.1 points to 51.8.  Hungary’s index also fell by 1.1 points, reaching 50.1. 

There are two Chinese PMI-manufacturing indices.  The HSBC index improved 0.6 to 49.9, while the government index edged 0.2 higher to 50.9.  Taiwan’s PMI sank further to 45.2, a 31-month low, from 46.1 in July and 49.9 in June.  South Korea’s PMI dropped 1.6 points and more importantly crossed over the 50 threshold to 49.7.

Brazil’s index dropped to a 28-month low of 46.0 from 47.8 in July and 49.0 in June.  Emerging markets have not been immune from generalized financial market turbulence caused by the difficulties of the advanced economies.  Yesterday, the Central Bank of Brazil became the first monetary authority to cut rates after a significant series of tightenings.  Its policymaking committee, COPOM, cut the SELIC rate to 12.0% from 12.5%.

The U.S. purchasing managers index brought a rare relief, falling just 0.3 to 50.6 and exceeding expectations of a 48.5 score.  Higher inventories and a smaller contraction in orders masked a 3.7-point decline in production and a 1.7-point deterioration in employment.

U.S. construction spending fell by 1.3% in July, the most in six months.  New jobless insurance claims of 409K were 12K less than in the previous week but left the four-week average (410.25K) little changed from 407.75K during the prior four weeks to July 30.

German GDP growth was confirmed to have nearly ceased in 2Q, firming just 0.1% after a 1.3% non-annualized gain in 1Q.  Personal consumption fell by 0.7%, and import growth of 3.2% surpassed the 2.3% increase in exports. 

Swiss GDP rose 0.4% last quarter and 2.3% on year.

The British Nationwide house price index posted a 0.6% drop in August and was 0.4% lower than in August 2010.

Danish retail sales fell 1.0% on month and 4.2% on year in July. 

South Korean consumer prices rose 0.9% in August and 5.3% on year.  Core inflation accelerated slightly to 4.0%.

Australian retail sales rose 0.5% in July but only 1.5% on year.

A new dispute broke out between President Obama and Congressional Republicans, who rejected his bid to present a prime time address on the same night as the Republican presidential candidates are debating.  Instead, Obama will compete with the opening game of the NFL football season.

The dollar is 1.2% weaker against the Swiss franc and off 0.3% and 0.2% versus the Aussie and Canadian dollars.  The greenback is 0.9% higher against the euro and up 0.5% relative to the yen and sterling.  It also firmed 04% against the kiwi and 0.1% against the yuan.

The Nikkei improved 1.2%.  Other Pacific Rim stocks recorded minor changes overnight.  The German Dax dived 1.0%.  The Dow opened marginally higher.

Oil and gold prices are 0.2% and 0.3% lower at $88.67 per barrel and 0.3% per ounce. 

Ten-year British gilt yields rose five basis points, while bunds fell by four bps.\

Copyright 2011, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



Comments are closed.