Holidays, Manufacturing PMSs, and A Hurricane for the Ages

September 2, 2019

It’s Labor Day in the United States and Canada.

When Hurricane Dorian hit the northern Bahama Islands, it became the strongest Atlantic Hurricane to make landfall. Dorian is currently 120 miles east of West Palm Beach and crawling very slowly, with the hope that it will veer north rather than move over Florida.

The dollar strengthened 0.8% against sterling and 0.6% relative to the Australian dollar, and it moved above 7.17 yuan to an intraday new high of CNY 7.1737. The dollar also rose 0.3% versus the peso, 0.2% vis-a-vis the loonie, euro, and Swiss franc but just 0.1% relative to the yen.

The prices of gold and oil are marginally firmer.

The ten-year British gilt yield fell 5 basis points, while those in Spain and Portugal (up 3 bps) and Germany, Japan and France (up 1 basis point) are higher.

Stock markets in the Pacific Rim this Monday fell 0.8% in Singapore and by 0.4% in Japan, Hong Kong, and Australia, but the Chinese market jumped 1.3%. In Europe, share prices climbed 0.8% in the U.K. and 0.2% in France and Germany so far.

Euroland’s manufacturing purchasing managers index printed at a 2-month high of 47.0 in August, matching the preliminary estimate and 0.5 points higher than July’s weakest level since April of 2013. Only Greece, France and the Netherlands had readings above 50.0, which correlates to “no change,” and August saw the seventh straight sub-50 score. Germany’s 43.5 reading was the lowest of countries using the euro. Besides contracting activity, inflation in the region continues to shrink. Ireland’s 76-month low of 48.6 was the only nation to report a lower reading for August than July.

Japan’s manufacturing PMI slipped to a 2-month low of 49.3 and was the fourth straight sub-50 reading. Business confidence among Japanese manufacturers remains very subdued.

Chinese manufacturing returned to positive, albeit weak, growth with a PMI of 50.4, which constitutes a 5-month high.

India’s PMI fell 1.1 points to a 15-month low of 51.4. Growth slowed in sales, output and jobs, and cost inflation dropped for the first time in 15 months.

Among other reported Asian manufacturing PMI surveys, Indonesia’s fell 0.6 points to a 25-month low of 49.0, and those for Thailand (a 6-month low of 50.0), the Philippines ( a 2-month low of 51.9), Taiwan (a 2-month low of 47.9), and even South Korea (a 4-month high of 49.0) reflected difficult conditions in the face of Trump’s trade war.

Australian PMIs gave a mixed picture of manufacturing, with the CBA-compiled index slipping 0.7 points to a 4-month low of 50.9, and the AIG-compiled index increasing 1.8 points to a 4-month high of 53.1.

The British manufacturing PMI in August underperformed analyst expectations, dropping 0.6 points to an 85-month low of 47.4.

Sweden’s manufacturing PMI improved to a 3-month high of 52.4, and the Swiss factory PMI recovered 2.5 points to a 2-month high but remained mired well below 50 at 47.2. Norway’s PMI jumped 5.1 points to 53.8.

In Eastern Europe, the Russian manufacturing PMI of 49.1 printed below 50 for a fourth straight month and revealed the fastest contraction of demand in 51 months. But Poland’s PMI rose 1.4 points to a 3-month high of 48.8, and the Czech index climbed 1.8 points to a 2-month high of 44.9 despite the second softest orders reading since April 2009.

Brazil’s manufacturing PMI, which had dipped under 50 to 49.9 in July, rebounded to a 5-month high in August of 52.5.

In other data released today,

Turkish GDP recorded a smaller on-year decline (1.5%) in the second quarter than had been feared, but it was the third negative quarter in a row.

Swiss retail sales volume dipped 0.1% on month in July but rose 1.4% on year, which was the most in nine months.

Japanese motor vehicle sales grew less sharply on year in August (4.0%) than in July (6.7%).

Japanese corporate investment rose 1.5% on quarter in 2Q19 but was accompanied by quarterly declines of 5.0% in earnings and 0.1% in sales.

Australian corporate profits last quarter accelerated to a 4.5% quarterly rate of growth and were 11.1% above a year earlier.

New Zealand’s terms of trade (export/import price ratio) rose 1.6% last quarter as the rise in export prices of 3.4% eclipsed that of import prices (1.8%).

Indonesian CPI inflation climbed to 3.5% in August, highest since January 2018. Core CPI of 3.3% was also higher than in the prior month.

Hungarian PPI inflation remained muted in July at 0.3%.

South Korea accrued a year-to-August trade surplus of $23.16 billion, 48% narrower than in the first eight months of 2018.

Copyright 2019, Larry Greenberg. All rights reserved. No secondary distribution without express permission.


Tags: , ,


Comments are closed.