October Manufacturing PMI Indices and an FOMC Meeting Later
November 1, 2023
Today’s data release calendar is full of manufacturing purchasing manager surveys, although some key ones from Europe such as those for Germany, France, Italy, Spain and the whole euro area will be delayed a day due to this being All Saints Day. The FOMC policy statement is due at 14:00 EDT and will be followed 30 minutes later by Chairman Powell’s press conference. A rate hike is not expected, but investors hope for clarification about the December meeting when more tightening remains quite plausibly in play. ADP’s estimate of October private sector U.S. employment growth arrives today.
In advance of the FOMC meeting, the dollar firmed overnight by 0.3% against the euro and 0.1% versus the Canadian and Australian dollars as well as sterling. On the other hand, the yen (+0.3%) recouped some of Tuesday’s steep drop after Vice Finance Minister for International Affairs Kanda warned speculative sellers of Japan’s currency that the government is considering intervention support against sharp, one-sided movements in the yen.
U.S. stock futures and key European equity markets are down about 0.3%. Stock markets in the Pacific Rim were mixed, with gains of 2.4% in Japan, 1.0% in South Korea and 0.9% in Australia and New Zealand but also losses of 1.6% in Indonesia, 0.4% in India and 0.1% in Hong Kong.
Ten-year sovereign debt yields advanced by ten basis points in Italy, three bps in Spain, two bps in Germany and France and one basis point in Japan. The 10-year U.S. Treasury yield has risen three basis points.
Prices for WTI oil and bitcoin tokens rose overnight by 1.4% and 0.7%. Gold is generally steady after moving back below $2000 yesterday.
Most of the manufacturing purchasing manager indices reported today printed below the 50 threshold, signifying a weakening trend in that sector’s business activity. Exceptions include an 8-month low of 55.5 in India, a 5-month low of 51.3 in Indonesia, a 2-month low of 53.8 in Russia, and a 2-month high of 50.8 in the Greek index. A silver lining in many of the surveys was further confirmation of receding inflationary pressure.
The Australian PMI got revised marginally upward but, at 48.2, was still its lowest in for months. Japan‘s final manufacturing PMI for October of 48.7 was 0.2 points above both the preliminary estimate and the 7-month low touched in September. The British PMI, a 3-month high, was revised 0.4 points lower to 44.8 that conveys a pretty depressed manufacturing sector landscape at the start of the fourth quarter.
The Dutch and Czech PMI readings from October (respectively at 2-month highs of 43.8 and 42.0) also were south of 45.0. Even worse news came from Switzerland whose manufacturing PMI dropped 4.3 points to a 2-month low of 40.6, just 2.1 points above the 171-month low recorded in July. Turkey‘s PMI fell 1.1 points to a 10-month low of 48.4, while Ireland‘s index slid 1.4 points to a 3-month low of 48.2. Norway‘s score of 47.9 was at a 5-month low and followed three straight months above 50.0 including 56.4 in July, and Sweden‘s 45.7 reading indicated the slowest decline in activity since July.
Malaysia‘s PMI reading of 48.6 matched September’s 8-month low. South Korea‘s PMI (a 2-month low of 49.8) failed to reach 50 as had been anticipated. Thailand’s index slid 0.2 points lower to a 32-month trough of 47.5, and Vietnam‘s PMI score of 49.6 was down from 49.7 in September and a 6-month high of 50.5 in August. Taiwan‘s PMI increased to a 7-month high but stayed in contractionary territory at 47.6. The news from China was disappointing, as its manufacturing index dipped to a 3-month low of 49.5 after printing at 51.0 in August and 50.6 in September.
The Absa-compiled South African manufacturing PMI fell 0.8 points to a 27-month low of 45.4. Still ahead today are PMI releases from the United States, Mexico, Brazil and Canada.
In other data news this Wednesday, A 0.9% jump in the British Nationwide house price index during October was the biggest monthly increase in 14 months and resulted in the smallest year-on-year drop (-3.3%) since April. Way back in March 2022, the house price index crested at a 14.3% on-year advance.
CPI inflation in Indonesia ticked upward in October to a 2-month high but remained quite benign at 2.56%, having crested at a 7-year high of 5.95% in September 2022. Moreover, core inflation in Indonesia slid below 2.0% for the first time since January 2022.
Although still in double digits, consumer price inflation in Kazakhstan of 10.8% last month was at a 20-month low and just half the 21.3% increase recorded last February.
Pakistani CPI inflation has likewise slowed from a record high of 38.0% in May to 31.4% in September and a 10-month low in October of 26.9%.
Third-quarter labor market statistics for New Zealand showed a nine-quarter high jobless rate of 3.9% versus 3.6% in the prior quarter and 3.2% in early 2022. Despite that rise, on-year labor cost growth remained at a 4.3% plateau for a third straight quarter.
U.S. mortgage applications fell for the fifth time in six weeks. The 2.1% slide last week extends the net decrease over the whole period to 16.1% in the face of elevated mortgage rates that for the 30-year maturity remain close to 8.0%.
Just In: ADP’s October estimated rise in U.S. private sector jobs of 113 thousand is smaller than analysts were expecting but larger than their September figures of 89k, which proved to grossly understate the strength of the labor market when the Labor department two days later reported a 336k leap in total nonfarm payroll jobs that included a net 263 increase in private sector employees.
Copyright 2023, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
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