Tankan, Manufacturing PMIs, and U.S. Jobless Claims Data Released
October 1, 2015
The dollar traded up 0.4% against the Swiss franc and 0.2% against the euro but has declined by 0.8% versus the Aussie dollar, 0.7% relative to the kiwi, 0.4% vis-a-vis the loonie and 0.1% against the yen and sterling. The yuan remained unchanged.
After a difficult September, Comex gold is unchanged at $1,115.03 per ounce.
West Texas Intermediate crude oil rebounded 1.0% to $46.11 per barrel.
The Ten-year German bund yield increased two basis points, while its Japanese counterpart fell three bps today.
Share prices climbed 1.9% in Japan and Hong Kong, 1.8% in Australia, 1.4% in Taiwan, 0.8% in China and South Korea and 0.7% in Indonesia.
In European trading, stocks have declined 0.5% in Greece, 0.3% in Germany, and 0.1% in Italy but are up 0.7% in Switzerland, 0.5% in France, 1.1% in Spain and 0.2% in Great Britain.
In the Bank of Japan’s quarterly Tankan survey of corporations, both optimists and pessimists can find something to support their thinking. Conditions faced by large manufacturers were not as favorable as at midyear, but those for large non-manufacturers improved. A deterioration between now and end-2015 is anticipated, but firms are more hopeful about sales prospects and investment plans.
The Japanese manufacturing purchasing managers index slid 0.7 points to a 3-month low of 51.0 in September, with export demand contracting for the first time in fifteen months.
Two sets of Chinese PMIs were reported. China is closed for a couple of days, observing the anniversary of the 1949 Communist Revolution.
- The government-compiled manufacturing index edged up 0.1 but at 49.8 was below 50 for a second straight month in September. The services PMI stayed at 53.4 according to the government.
- The privately compiled manufacturing PMI by Caixin fell to a 78-month low of 47.2 in September from 47.3 in August. Production and jobs were at 6-1/2 year lows. Caixin’s services PMI was 50.5, down a full point from August and at an 80-month trough. The composite PMI fell 0.8 to 48.0, indicating a deterioration of operating conditions.
Euroland’s manufacturing PMI fell 0.3 points to a 5-month low of 52.0. Both input and output prices declined, and export demand rose more slowly.
Among eurozone member manufacturing PMI results in September, Italy’s 52.7 constituted a 7-month low after 53.8 the month before. Spain’s 51.7 was down from 53.2, thus below expectations and at a 21-month low. Germany’s 52.3 slid to a 2-month low, and the Dutch PMI dropped 0.9 points to 53.0, a 6-month low. But Austria’s PMI rose to a 19-month high of 52.5, France’s index climbed 2.3 points to 50.6, and the Irish PMI bounced off August’s 18-month low of 53.6 to 53.8. Only Greece remained with a sub-50 reading, that being a 3-month high of 43.3.
The British PMI edged down 0.1 to a 3-month low of 51.5. Input prices fell at the fastest pace in 16 years, and jobs contracted, too.
The Swiss manufacturing PMI declined 2.7 points to a 2-month low of 49.5, the fourth sub-50 reading (implying a contraction) in six months.
Sweden’s PMI edged 0.1 higher to a 2-month high of 53.3.
Norway’s 47.3 reading was below 50 for a fifth straight month.
Hungary’s PMI advanced to 55.8 in September from 51.0 in August and 49.9 in July. Such previously had been comfortably above 50 as it is again.
The Czech PMI declined 1.1 points to a 4-month low of 55.5, but the third-quarter saw the best quarterly average score since 2Q11.
Poland’s 50.9 reading represents a 12-month low.
Australia’s PMI improved 0.4 points to 52.1, indicating the fastest expansion rate since May.
South Korea’s PMI was still below the 50 threshold, but at 49.2 such was the best result since March.
The Taiwanese PMI recovered 0.8 points to 46.9, a 2-month high.
The Vietnamese PMI sank below 50 for the first time in 25 months to post a score of 49.5.
Malaysia’s 48.3 reading was a 4-month high after August’s 34-month low of 47.2.
Indonesia’s PMI fell a whole point to a 2-month low of 47.4.
The Russian PMI rebounded 1.2 points to a 7-month high of 49.1, still implying a deterioration of operating conditions nonetheless.
India’s PMI dropped 1.1 points, signifying a slower pace of expansion with a reading of 51.2, which is a 7-month low.
Turkey’s 48.8 reading on its manufacturing purchasing managers index was at a 5-month low. Demand fell more quickly.
A generalization from all these PMI reports is that for most economies there was further disinflation or deflation. However, in those emerging markets like Turkey and Russia whose currencies are falling rapidly, there has been an intensification of upward pressure on prices.
U.S. jobless insurance claims last week rose 10K to 277K, but the 4-week average of 270-3/4K was lower than 275.5K seen in the previous four weeks to August 29. Jobless claims data, which arguably give the best picture of labor market health, provide the strongest evidence that it may be time for the Fed to start raising interest rates. However, labor market conditions are not the sole criterion in this upcoming decision.
In the year to September, consumer prices rose 6.83% in Indonesia, buoyed by the depreciating rupiah, but fell 1.1% in Thailand. Thai producer prices dropped even faster, 3.6%, in that statement year.
South Korea’s trade surplus more than doubled from $4.3 billion in August to $8.9 billion in September. In the year to August, South Korean retail sales increased 1.8%, but industrial production went up just 0.3%.
British unit labor costs rose 0.5% on quarter in 2Q and 2.2% on year, most since 4Q12. U.K. productivity growth also quickened, advancing 0.9% from the first-quarter level and 1.3% on year.
Swiss retail sales volume fell 0.3% between August 2014 and August 2015.
Japanese motor vehicle sales declined 3.0% on year in September. Japanese stock and bond transactions last week generated a net JPY 2.327 trillion capital outflow on top of the prior week’s outflow of JPY 1.538 trillion.
Investors now await the U.S. manufacturing purchasing managers survey due shortly. Tomorrow brings the Labor Department’s September jobs report.
Copyright 2015, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
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