Factory PMIs Released and High Hopes Regarding U.S. Jobs Report

September 1, 2017

Narrow net changes in the dollar (+/- 0.2%) characterize most key relationships. A 0.5% rise of the yuan is an exception.

Solid gains in European stocks can be seen, including 0.9% in France, 0.8% in Germany, 0.6% in Italy and 0.3% in Great Britain. Indian, Chinese and Japanese stock markets rose by 0.7%, 0.2% and 0.2%.

Japan’s 10-year JGB yield slipped below zero for the first time in nine months. But the 10-year German bund and British gilt yields are higher, and futures trading points to a rise in the U.S. treasury yield as well.

WTI crude oil sank 0.8% to $46.85 per barrel. Gold initially fell overnight but now shows a net uptick of 0.1% to $1,323.60 per barrel.

Euroland’s manufacturing purchasing managers index (PMI) printed at a 2-month high of 57.4 in August, matching its preliminary estimate.The results suggest a 4% rate of manufacturing growth in the quarter and indicate rising input price inflation. All reporting members of the euro area had PMI scores above 50.0, indicating improving conditions, and most had a faster rate of improvement than seen in July. An exception was Spain, whose PMI fell 1.6 points to an 11-month low of 52.4. The Austrian, Dutch and Italian PMIs were the highest in 78 months, and France’s PMI was a 76-month high. The Greek PMI was the best score in 9 years, and the Irish reading was a 25-month high.

Japan’s manufacturing PMI edged up 0.1 to a 2-month high of 52.2 in August.

China’s factory PMI of 51.6 was at a half-year peak, and India’s recovered to a 3-month high of 51.2 from a 101-month low in July of 47.9.

Australia’s Performance of Manufacturing index scored a 59.8, best in 87 months.

Britain’s August PMI of 56.9 after 56.6 in July suggests a revival of manufacturing perhaps reflecting the more competitive value of sterling.

Sweden’s manufacturing PMI plunged 5.6 points to a 13-month low of 54.7.

The Swiss factory PMI, however, advanced to a new high for the move of 61.2.

Manufacturing PMI readings for Taiwan of 54.3, Vietnam of 51.8 and South Korea of 49.9 were at 4-, 2- and 2-month highs.

Because of the HAJJ holiday, PMI’s were not reported for Indonesia, Singapore, Turkey or Malaysia.

The Russian manufacturing PMI fell to a 2-month low of 51.6.

The Czech PMI of 54.9 was 0.4 points lower than July’s score and at an 8-month low. Poland’s 52.5 PMI represents a 2-month high.

Japanese consumer confidence settled back 0.5 points to 43.3 in August, matching June’s score. Japanese motor vehicle sales in August were 4.7% higher than a year earlier after an on-year drop in July but a big increase in June. Japanese business investment in the second quarter went up just 1.5%, much less than the first GDP growth estimate had been assuming. Profits and sales rose by 22.6% and 6.7%.

Several economies reported 2Q GDP. 

  • Italian GDP grew 0.4% on quarter and 1.5% on year.
  • Greek GDP went up 0.5% on quarter and 0.8% on year, doubling the on-year increase of the first quarter.
  • South Korean GDP climbed 0.6% on quarter and 2.7% from 2Q16.
  • Finnish GDP increased 0.4% on quarter, just a third as much as in 1Q, but on-year growth held steady at 3.0%.
  • Czech GDP growth was revised up to 2.5% on quarter and 4.7% on year.

The Central Bank of the Republic of Colombia cut its interest rate for a sixth straight month, lowering such to 5.25% from 5.50%.

South Korean CPI inflation accelerated to 2.6% in August from 2.2% in June.

The Swedish current account surplus of SEK 39.5 billion in the second quarter was 39% greater than a year earlier.

Swiss retail sales fell 1.3% on month and 0.7% on year in July.

Today’s is U.S. jobs day. Investors have high hopes that employment growth in August may beat the street consensus in light of a stellar ADP private jobs estimate released earlier this week. However, the big question is whether such will be associated with an acceleration of wage inflation. So far, there has been a disconnection between a tightening labor market and inflation.

The U.S. manufacturing PMI also gets released today along with the U. Michigan/Reuters consumer sentiment index.

Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.




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