Elevating Inflation Shared by Many Economies as 3Q Draws to a Close
September 30, 2026
The dollar and U.S. equity futures marked time overnight as investors await key U.S. growth and inflation indicators. The U.S. currency is 0.1% softer against the yen, euro, Swiss franc, Canadian dollar, and kiwi. President Trump strengthened his pitch for a self-regulating AI industry.
Stock markets in the Pacific Rim on this final session of the third quarter closed up 1.9% in Japan, 0.9% in Australia, 0.4% in Hong Kong and 0.3% in China but also fell by 0.8% in Indonesia and 0.5% in South Korea. The Paris CAC, German DAX and British FTSE are so far down 0.2%, unchanged and 0.4% firmer.
Ten-year sovereign debt yields climbed significantly this quarter but today show declines of five basis points in Germany, Spain and Italy, three basis points in Switzerland, Japan and the U.K., but just a single basis point in the United States.
The price of West Texas Intermediate crude oil moved back marginally above the $90 per barrel threshold and is 0.9% higher so far today. Bitcoin has fallen by 0.5%.
Japanese industrial production (-1.7% on month) and retail sales (-1.2%) each underperformed expectations in August but were above year-earlier levels by 3.4% and 2.7% respectively. A 6.1% year-on-year increase in housing starts was the smallest rise in three months but the fifth increase in a row. Construction orders (-3.6% relative to August 2025) posted a 12-month drop for the fifth time in six months but by a smaller degree than in the four other instances.
As in Japan, South Korean industrial production (-4.8%) and retail sales (-1.8%) each recorded monthly declines during August.
Due to the upcoming week-long Chinese holiday, September purchasing manager survey results were released a bit earlier than usual. The NBS government-authorized composite PMI of 50.7 was above the 50 neutrality level for the first time since June and included 3-month highs of 50.1 in both the manufacturing and non-manufacturing sectors. The flow of new orders improved, but inflation also picked up. The S&P Global composite PMI of 52.4 was also at a 3-month high, as were the associated service sector index of 51.6. The manufacturing PMI increased 0.8 points to a 5-month high of 52.4.
Wednesday saw many Euroland data reports. In the bloc’s largest member, Germany retail sales recovered 1.3% in August, its best month-on-month performance in 14 months but following an unchanged June figures and a dive of 3.2% in July. Sales were still 0.4% lower than a year beforehand. Among price news, import prices leaped 1.0% in August and to a 44-month high year-on-year advance of 8.3% versus -2.8% in January and February. The six German states that report individual consumer price inflation had a range of increases in September of between 0.3 and 0.5 percentage points, suggesting a national pace of more than 3.0% and the most elevated national reading in around three years. German unemployment stayed at 6.4% this month. Just in: German consumer prices rose 0.6% in September, lifting their 12-month rate of increase to a 32-month high of 3.3% from 2.9% in August and twice the 1.6% low touched in September 2024.
French consumer price inflation in September accelerated to a 31-month high 3.0% from 2.4% in August and just 0.3% at the start of this year. French producer price inflation of 4.8% in August was the highest in 39 months and well above July’s 3.5% reading.
Italian consumer price inflation of 4.2% this month after 3.3% in August was its highest reading in 3 years and far above a low of 0.6% at the end of 2023. Italy also reported a 5-month low in consumer confidence for September but a 3-month high in sentiment among manufacturers.
CPI inflation this month also climbed in Slovenia to a 3-month high of 3.8%, Poland to a 15-month high of 4.0%. Producer price inflation in August reached 17.4% in Bulgaria, 4.8% in Hungary, 4.6% in Austria and 3.1% in the Philippines.
British GDP growth in the second quarter got revised marginally upward to 0.5% and was associated with a 1.1% average increase between the first halves of 2025 and 2026. A current account deficit in the U.K. of GBP 19.9 billion was its smallest in three quarters but still equal to a significant 2.5% of GDP.
Today’s slew of U.S. data reports had more good than bad aspects. Economic growth in the first half of 2026 got revised upward to show annualized quarter-on-quarter increases of 2.5% in 1Q and 2.2% in the second quarter, which had been previously estimated at only 1.7%. The 2.0% growth in the half followed 2.5% in the second half of 2025 and 1.6% in the first half of that year. While personal income in August rose by a smaller-than-expected 0.2%, personal consumption expenditures leaped 0.9%. The total PCE price deflator went up by a less-than-anticipated 0.3% on month, keeping its 12-month rate of rise steady at 3.4%. The core PCE deflator also held steady at 3.0%. While lower than forecast, these figures still exceed the 2.0% target by an unacceptable margin. One piece of adverse U.S. news involved the early estimate of a $132.6 billion goods trade deficit in August, making such the biggest shortfall since March 2025. Another concerned mortgage applications, which last week fell by 6.0%, bringing the cumulative slide over the first four weeks of September to 11.8%. Weakening housing demand is understandable in light of the sharp advance of the 30-year fixed mortgage rate 6.79% in the final week of August to 7.30%, 34-month high, last week.
Copyright 2026, Larry Greenberg. All rights reserved.
Tags: French and Italian CPI, German CPI and import prices, Japanese and South Korean industrial production and retail sales, U.S. GDP and personal consumption price deflator, U.S. mortgage applications and August trade deficit
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