September Kicks Off With a Mix of Better-than-Expected and Weaker-than-Expected Data
September 1, 2023
The dollar’s been well bid today, with gains of 0.6% against the Australian currency and Mexican peso, 0.5% versus the euro, sterling, yen, loonie, and ruble, 0.4% relative to the kiwi, and 0.2% vis-a-vis the Swiss franc.
The price of oil jumped another 1.7%, while that of bitcoin declined 0.3%.
Ten-year sovereign debt yields were pushed up eight basis points in Germany, France and Italy, seven basis points in the United States, and six basis points in Great Britain. But the 10-year Japanese JGB yield settled back two basis points.
Share prices in Asia closed up 0.9% in India, 0.6% in Hong Kong, 0.4% in Indonesia, Singapore and China, and 0.3% in Japan. Australia’s stock market lost 0.4%, and U.S. share prices have moved only marginally on net. The British FTSE is 0.5% firmer so far, and the German Dax has fallen 0.5%.
U.S. August labor statistics are consistent with a cooler temperatures. A 187K rise in jobs was a tad above analyst expectations. However the combined increase of non-farm employment in June and July were revised downwards by 110K, and 187K was considerably below the prior dozen months’ average increase of 271K. In addition, July’s 3.5% unemployment rate, which had been projected to hold steady, gave way to a 3.8% reading in August, and the U-6 measure of unemployment and underemployment jumped by 0.4 percentage points to 7.1%. Rises in average hourly earnings of 0.2% from July and 4.3% compared to a year earlier were each lower than the prior month’s results and below analyst expectations. Labor market participation increased for the first time in five months, and hours worked per week also increased.
To the north of the United States where wild fires continue to rage, neighboring Canada unexpectedly reported a 0.2% annualized quarter-on-quarter dip in real GDP during the second quarter. That was the weakest result in two years and reflected a number of factors: lessening inventory accumulation, slower growth in exports than imports, continuing weakness in residential construction, and much slower expansion of personal consumption. The small contraction of GDP in 2Q followed a 2.6% positive growth rate in the first quarter. Monthly GDP compiled from supply-side information reversed May’s 0.2% advance with a 0.2% decline in June and was only 1.1% above its year-earlier level. Canadian industrial production also slipped 0.2% in June and was down 0.3% compared to June 2022.
In contrast to Canada, Brazilian 2Q GDP growth of 0.5% on quarter and 3.4% on year outpaced market expectations.
Price data out today showed a record 10.2% year-on-year drop in Italian producer prices in July, constituting a dramatic implosion from a 41.7% PPI inflation reading in September 2022. Indonesian consumer price inflation rose for the first time in a half year but only by 0.2 percentage points above July’s 16-month low of 3.08% to 3.27% in August. The British Nationwide house price index was 5.3% below its year-earlier level in August. That was more negative than expected and contrasts with year-on-year increases of 10.0% in August 2022 and 41.7% in March 2022.
A bundle of August manufacturing purchasing manager survey results were reported this first day of September.
- The ISM-compiled U.S. PMI among manufacturers rose to a 6-month high in August but, at 47.6, remained under the 50 level that separates expansion from contraction. December 2022 was the last reading with a 50-handle.
- The S&P Global U.S. PMI was revised almost a full point higher but, at 47.9, was still at a 2-month low.
- Euroland’s revised PMI printed at 43.5. Only Greece and Ireland had readings above 50.0, and Germany’s score of 39.1 was only barely above July’s 38-month low. But there were silver linings in the full report. The 43.5 reading was still at a 3-month high, and none of its subindices recorded a significant slide, leading the compilers of the data to conclude that the recent downtrend of manufacturing activity may be losing momentum.
- Britain’s PMI fell 2.3 points to a 39-month low of 43.0 in August.
- Among other European economies, manufacturing PMIs declined in August to a 10-month low of 43.1 in Poland, and 8-month low of 49.0 in Turkey, a 2-month low of 51.4 in Norway, and a 2-month low of 45.8 in Sweden. The Russian PMI bounced off a 9-month low in July to a 3-month high of 52.7 last month, and the Swiss and Hungarian readings of 39.9 and 46.5 constitute 2- and 3-month highs.
- South Africa’s Absa-compiled PMI rose above July’s 2-year low of 47.3 to a 4-month high of 49.7.
- Australia‘s manufacturing PMI printed at a 6-month high but still-contractionary 49.6.
- Japan‘s manufacturing PMI matched July’s 3-month low of 49.6.
- China‘s two manufacturing PMI scores of 49.7 and 51.0 were the highest readings in five and six months, respectively.
- Elsewhere in Asia, India’s reading of 58.6 was at a 3-month high; Indonesia’s 53.9 was its highest reading since November 2021; Taiwan scored a 44.3, its thirteenth sub-50 reading in a row but higher than June’s 44.1; the Filipino PMI fell below the 50 threshold to a two-year low of 49.7; Malaysia’s PMI was unchanged from July’s 2-month high of 48.9; South Korea’s PMI dipped to a 2-month low of 48.9 and was the 14th sub-50 score in a row; and Thailand’s PMI in manufacturing was at a 23-month low of 48.9.
The government-authorized NBS Chinese non-manufacturing and composite purchasing manager survey results have also been released. The former fell 0.3 points to an 8-month low of 51.8, while the composite index improved to a a 2-month high of 51.3.
Copyright 2023, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Canadian and Brazilian GDP, manufacturing purchasing manager surveys, U.S. monthly jobs report
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