Labor Day in America

September 3, 2012

The U.S. and Canadian markets are closed for the untimely observance of Labor Day.  The current U.S. jobless rate of 8.3% is down from 9.1% a year ago and 9.5% two years ago, but unemployment was at 4.7% five years ago. 

Elsewhere in the world, numerous purchasing manager survey releases have produced a mixed bag of results.

The Australian and New Zealand dollars have weakened 0.8% and 0.7% against the greenback.  The U.S. currency is otherwise unchanged against the euro, yen and sterling, down 0.1% versus the yuan, and up 0.1% relative to the loonie and Swiss franc.

Pacific Rim share prices rose 1.4% in Indonesia, 1.1% in China, and 0.3% in Australia but fell by 0.6% in Japan and 0.3% in India and Singapore.  In Europe, Spain’s IBEX has lost 0.6%, whereas the British Ftse, Paris Cac and German Dax have risen 0.6%, 0.5%, and 0.4%.

Ten-year German bund and British gilt yields are two basis points higher, while the 10-year Japanese JGB slid by two basis points and is again below 0.80%.

Gold prices firmed 0.2% to $1690.10 per ounce. Oil prices slipped 0.1% to $96.35 per barrel.

Australian retail sales in July fell 0.8% on month, their biggest drop in almost two years.  Job ads sank 2.3% last month; it was the fifth drop in a row.  Commodity prices in Australia were 18.5% lower than a year earlier in local currency terms and off 13.7% in SDR terms.  Australian corporate profits dropped 0.7% last quarter after a 4% tumble in 1Q12.

Japanese capital spending last quarter accelerated to a 7.7% advance, still less than analysts were anticipating.  Japanese motor vehicle sales recorded a 7.3% on-year increase in August following a 36% jump in the year to July.

HSBC revised its Chinese manufacturing purchasing managers index for August down a bit further to 47.6, signaling the largest rate of contraction since March 2009.  The flash estimate had been at 47.8, and July’s reading was 49.3.  The government’s manufacturing PMI printed at 49.2, the first sub-50 reading since November and corroborating the bearish signal from the HSBC data series.  The government reported a better non-manufacturing PMI of 56.3 for August.

Australia’s AIG performance of manufacturing index showed a lessening but nonetheless significant contraction of activity in August, printing at 45.3 following readings of 40.3 in July, 47.2 in June and 42.4 in May.  The last above-50 reading was in February.

The Reserve Bank of Australia is not expected to cut its Official Cash Rate this week, however.  For one thing, the TD-MI estimate of expected Australian inflation over the coming year accelerated in August to 2.2%, thus returning to the 2-3% target range.

Turkish CPI inflation edged down to 8.9% in August from 9.1% in July.  PPI inflation slowed to 4.6% from 6.1%.  Thai CPI inflation remained steady in August at 2.7%, while PPI inflation collapsed to 0.1% from 0.7%.

Swiss retail sales volume fell by 0.4% in July and posted an on-year advance of 3.2%.

India recorded a $15.5 billion trade deficit in July.  Indonesia’s trade shortfall that month was only $0.2 billion, by contrast.

And now for those August PMI results:

  • The euro area’s manufacturing purchasing managers index was revised to 45.1 from a flash estimate of 45.3.  45.1 matched June’s result and indicated a slower rate of contraction than in July, when the manufacturing index printed further below the 50 no-change level at 44.0.
  • Within the euro zone, Germany scored a 44.7, which is a 2-month high but under 50 for a sixth straight month.  The French reading of 46.0 was a 4-month high but below its flash estimate of 46.2 and, like Germany, the sixth sub-50 reading in a row. Spain’s 44.0 score was at a 5-month high, but Italy’s 43.6 was at a 10-month low.  Greece shot a 42.1 after scores of 41.9 in July, 40.1 in June, and 43.1 in May.  Austria’s 46.7 represented a 37-month low, while the Dutch score of 49.7 was above July’s 48.9 and a six-month peak.  Ireland, the only Ezone economy with a manufacturing PMI still above 50, was only barely so.  At 50.9, the Irish reading was at a 6-month low and down from 53.9 in July.
  • The British PMI improved much more than anticipated, rebounding to 49.5 from 45.2 in July and exceeding June’s 48.4.  This was Britain’s fourth straight sub-50 reading.  The U.K. economy remains fragile.
  • Sweden’s factory-sector PMI sank to a score of 45.1, lowest so far this year, after a 2.2-point rise to 50.6 in July. 
  • The Swiss PMI fell 1.9 points to 46.7, lowest since May and the fifth sub-50 score in a row.
  • The Danish PMI returned to above-50 ground, rising 5.2 points to 51.7.  This remained will below an average score of 55.1 in the first half of this year.
  • Hungary’s PMI slid 2.4 points to 49.5, lowest since April.
  • The Polish PMI dropped 1.4 points to 48.3, the second lowest reading in 35 months.
  • The Czech PMI declined 1.2 points to 48.7, worst since May.
  • Russia’s PMI fell a full point to 51.0, matching the score in June.
  • Turkey’s PMI straddled 50.0 after scores of 49.4 in July and 51.4 in June, but cost inflation intensified.
  • The Saudi purchasing managers index edged up 0.2 points from a 7-month low of 58.1 in July.
  • Taiwan’s PMI fell for a fifth consecutive time and printed at a depressed 46.1, lowest so far in 2012.
  • The Indonesian PMI rose 0.2 points to 51.6 and was accompanied by evidence of the least input price inflation in eight months.
  • India’s PMI edged down 0.1 points to 52.8.  Export orders contracted, and overall orders recorded their lowest score since November.
  • South Korea’s PMI rebounded 0.3 points to 47.5 but was under 50 for a third straight month.
  • South Africa’s PMI dropped 0.8 points to 50.2.

The big event of this week is the ECB press conference on Thursday.  U.S. jobs data on Friday will have political as well as economic implications.

Copyright 2012, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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