Thu 3 Aug 2017


watch Nightly Business Report. watch Bloomberg Technology. watch Bloomberg Surveillance.
watch WSJ:Special Counsel Robert Mueller’s authority to investigate potential links between President Trump’s campaign and Russian officials.
watch Bloomberg: Mueller impanels Grand Jury. Subpoenas issued, incl Donald J Trump Jr, Jared C Kushner and Natalia Veselnitskaya Reuters
watch Bloomberg TV: Australia’s International Trade.

In Portfolioticker today

Today at the stock market

bull/bearU.S. stocks fell, the USD weakened versus the JPY and Treasuries rose after the Wall Street Journal reported Special Counsel Robert Mueller was said to have impaneled a grand jury in the ongoing Russia probe. WSJ Article More: Reuters

The WSJ report (3:38 p.m), a half hour before the NYSE closed, sent the S&P 500 Index to its lows for the session before the measure reclaimed some ground to finish down 0.3%. The Dow Jones Industrial Average eked out a fresh record. Ten-year Treasury yields slumped and the JPY strengthened. Crude fell below $49/barrel, while gold slipped.

  • The S&P 500 Index lost 0.3% as of 4 p.m. in New York.
  • The Dow climbed less than 10 points to notch a fresh record.
  • The Stoxx Europe 600 Index added 0.1%.
  • The MSCI All-Country World Index declined 0.2%.
  • The U.K.’s FTSE 100 Index advanced 0.9% to the highest in 2 weeks.

News that Mueller, who is probing Russia’s interference in 2016 U.S. elections as well as possible collusion with Trump campaign, has impaneled a grand jury, briefly rattled markets that have recently shown little reaction to persistent signs of turmoil in Washington. Stocks had traded little changed for most of the session with corporate earnings in focus before Friday’s jobs report.Bloomberg

Market indices

:-) The Dow Jones Industrial Average index closed on a record high of 22,026.10 up 0.04% on yesterday’s record of 22,016.24.

Index Ticker Today Change 31 Dec 16 YTD
S&P 500 SPX (INX) 2,472.16 -0.22% 2,238.83 +10.42%
DJIA INDU 22,026.10 +0.04% 19,762.60 +11.45%
NASDAQ IXIC 6,340.34 -0.36% 5,383.12 +17.78%

The portfolio today

USD and AUD denominated indices over the past 52 weeks (Chart: Bunting)
^ USD and AUD denominated indices over the past 52 weeks Chart: Bunting

Index values

Index Currency Today Change 31 Dec 16 YTD
USD-denominated Index USD 2.774 -0.89% 2.105 +31.79%
Valuation Rate USD/AUD 0.79987 -0.21% 0.72663 +10.07%
AUD-denominated Index AUD 3.471 -0.69% 2.895 +19.90%

Portfolio stock prices

Stock Ticker Today Change 31 Dec 16 YTD
Alphabet A GOOGL $940.30 -0.77% $792.45 +18.65%
Alphabet C GOOG $923.65 -0.72% $771.82 +19.67%
Apple AAPL $155.57 -1.00% $115.82 +34.32%
Amazon AMZN $986.92 -0.90% $749.87 +31.61%
Ebay EBAY $35.71 -0.53% $29.69 +20.27%
Facebook FB $168.59 -0.42% $115.05 +46.53%
PayPal PYPL $58.42 -1.18% $39.47 +48.01%
Twitter TWTR $16.18 +0.68% $16.30 -0.74%
Visa V $100.59 -0.64% $78.02 +28.92%
VMware VMW $92.43 +0.31% $78.73 +17.40%

FX: USD/AUD

USD

DXY movements
^ Bloomberg Dollar Spot Index (DXY) movements today (mouseover for 12 month view) Chart: Bloomberg

The Bloomberg Dollar Spot Index (DXY) lost 0.1% and is down 8.9% in the year.
Japan’s JPY gained 0.7% to USD 109.951.
Britain’s GBP declined 0.6% to USD 1.3138, the biggest drop in a month.
Bloomberg

AUD

AUD movements
^ AUD movements against the USD today (mouseover for 12 month view) Chart: xe.com

Oil and Gas Futures

Futures prices

Prices are as at 15:49 ET

  • NYMEX West Texas Intermediate (WTI): $48.93=/barrel -1.33% Chart
  • ICE (London) Brent North Sea Crude: $51.94/barrel -0.80% Chart
  • NYMEX Natural gas futures: $2.79/MMBTU -0.60% Chart

flag_australia AU: International Trade in Goods and Services. May 2017

shipinfog

Press Release Extract [ser_45]

Balance on Goods and Services

In trend terms, the balance on goods and services was a surplus of $1,166m in June 2017, a decrease of $409m on the surplus in May 2017.

In seasonally adjusted terms, the balance on goods and services was a surplus of $856m in June 2017, a decrease of $1,168m on the surplus in May 2017.

The sum of seasonally adjusted balances for the three months to June 2017 was a surplus of $2,804m, a decrease of $4,653m on the surplus of $7,457m for the three months to March 2017. However, if seasonal factors used in compiling the quarterly balance of payments are applied, the preliminary June quarter 2017 surplus was $3,278m, a decrease of $4,067m on the March quarter 2017 surplus of $7,345m.

Apr 2017 May 2017 Jun 2017 Change
EXPORTS of goods and services (Credits)
Trend estimates $32,268m $32,083m $31,866m -1%
Seasonally adjusted $30,058m $32,218m $31,779m -1%
IMPORTS of goods and services (Debits)
Trend estimates $30,264m $30,508m $30,701m +1%
Seasonally adjusted $30,133m $30,193m $30,923m +2%
BALANCE on goods and services
Trend estimates +$2,004m +$1,575m +$1,166m -26%
Seasonally adjusted -$76m +$2,024m +$856m -58%

Credits (Exports of Goods and Services)

In seasonally adjusted terms, goods and services credits fell $439m (1%) to $31,779m. Non-rural goods fell $740m (4%) and net exports of goods under merchanting fell $1m (4%). Non-monetary gold rose $406m (27%) and rural goods rose $26m (1%). Services credits fell $129m (2%).

Debits (Imports of Goods and Services)

In seasonally adjusted terms, goods and services debits rose $730m (2%) to $30,923m. Capital goods rose $733m (13%), non-monetary gold rose $238m (76%) and consumption goods rose $194m (2%). Intermediate and other merchandise goods fell $406m (4%). Services debits fell $30m.

2016-2017 Situation

In original terms, the balance on goods and services for 2016-17 was a surplus of $12.4b, a turnaround of $49.1b on the deficit of $36.7b recorded in 2015-16, resulting from a $53.2b (17%) increase in goods and services credits and a $4.1b (1%) increase in goods and services debits.

Australian Bureau of Statistics, “5368.0 – International Trade in Goods and Services, Australia, Jun 2017“, 3 Aug 2017 More

flag_australia AU: CBA Services PMI. Jul 2017

Press Release Extract [ser_cba]

Key Findings

The Australian service sector continued to expand markedly during July. Activity rose at an unchanged rate, while new work increased to the highest degree in three months. Capacity remained under pressure, however, with backlogs rising further. That led to further gains in employment. Price data showed accelerated rises in both input costs and output charges, whilst business confidence remained highly positive.

The seasonally adjusted Business Activity Index was unchanged at a reading of 57.0 in July. At this level, the index is indicative of strong growth and extends the current period of expansion to 15 months, with the latest increase again above the average for that period.

Supporting the latest rise in business activity was a further uptick in levels of incoming new work. Amid reports of a positive economic climate, firmer demand and successful promotional work, the rate of growth in new business was the best recorded for three months.

A similar trend was seen for employment in July, with service providers adding to their workforce numbers to the greatest degree since April. Rising workloads at units was the principal reason underpinning growth in employment.

Higher capacity helped to restrict backlog accumulation during the latest survey period. Whilst levels of work outstanding continued to increase, marking a fifteenth successive month of growth, the rate of expansion was the slowest recorded by the survey since the start of 2017.

With employment levels continuing to rise, and reports of higher wages being paid, anecdotal evidence suggested that operating expenses related to the service sector workforce increased. Moreover, suppliers were reported to be passing on their own price rises. The net impact was a strong rate of input price inflation that was the highest recorded by the survey to date.

Efforts to protect margins were subsequently bolstered during the month. This was reflected by an acceleration in output price inflation to a modest pace.

Finally, with around two-thirds of the survey panel indicating expectations for a rise in activity over the coming 12 months, business confidence remained high. Optimism was linked to hoped for improvements in demand, planned new products and higher marketing activities, plus expected organic company growth.

Commenting on the Commonwealth Bank Services and Composite PMI data, Michael Blythe, Chief Economist at the Commonwealth Bank, said:

‘The dominant services sector remains in very good shape. Not only are services generating strong growth in activity and jobs, but these trends are expected to continue. Strong growth is bringing with it some new problems for business. Some panellists are reporting capacity pressures with a flow on to wages and operating costs. Input costs are up as a result. Strong demand is allowing higher costs to be partly reflected in prices charged. Businesses need to remain focused on productivity improvements and capacity expansion as a way of dealing with these challenges.’

Commonwealth Bank of Australia, “Commonwealth Bank Services PMI® Purchasing Managers’ Index™ Report“, 3 Aug 2017 More

flag_australia AU: AiGroup Services PMI. Jul 2017

Press Release Extract [ser_psi_aig]

The Australian Industry Group Australian Performance of Services Index (Australian PSI®) rose by 1.6 points to 56.4 points in July (seasonally adjusted). This was the fifth consecutive month of expansion for the services sector and the strongest monthly result since December 2016. Results above 50 points indicate expansion, with higher numbers indicating a stronger rate of expansion.

au_psi_20170803

All five of the activity sub-indexes in the Australian PSI® were above 50 points and indicating growth in July (seasonally adjusted). Sales grew at a faster pace than in June, with this sub-index up 5.6 points to 60.3 points. The employment sub-index also indicated robust growth, lifting 3.7 points to 56.9 points. New orders fell by 3.7 points to 55.2 points. Supplier deliveries lifted by 1.4 points to 54.5 points while stocks fell by 0.5 points to 50.8 points, indicating stable or very mildly positive conditions in the month.

Six of the nine sub-sectors in the Australian PSI® expanded in July (trend) with results above 50 points, two were stable and one contracted. Personal and recreational services registered 62.1 points, finance and insurance improved to 59.6 points and communication services improved to 56.3 points in July. Wholesale trade (55.5) expanded at a similar pace to June, property and business services slowed (down 1.4 points to 51.8 points) and transport and storage (51.5) accelerated slightly. Health and community services (50.5) and hospitality (accommodation, cafes and restaurants) (49.5 points) were both relatively stable while retail trade shrank again (44.7 points).

Respondents to the Australian PSI® noted steady demand for business-to-business services. Some businesses noted an improvement in consumer confidence, but this does not seem to be translating into better conditions or sales in retail. Others said continued competition from offshore and online providers is dampening activity across local consumer-oriented services sectors.

ACTIVITY SUB-INDEXES

  • Sales expanded strongly in July, with this sub-index gaining 5.6 points to 60.3 points (seasonally adjusted). This was the fifth consecutive month of expansion in this sub- index and the strongest monthly result since December 2016.
  • The employment sub-index lifted 3.7 points to 56.9 in July and indicated expansion again, following a mild contraction in May after months of growth in early 2017. This was the strongest monthly result for the employment sub-index since May 2015.
  • The new orders sub-index fell by 3.7 points to 55.2 in July. This was the fifth consecutive month of growth for this sub-index, suggesting further growth later in 2017.
  • The supplier deliveries sub-index in the Australian PSI® grew by 1.4 points to 54.5 points in July and indicated a faster pace of growth in deliveries. This marked two months of expansion following mixed results in the first half of the year.
  • Stocks (inventories) in the Australian PSI® were broadly stable over the month, with this sub-index moderating by 0.5 points to 50.8 points in July.
  • Capacity utilisation across the services sector increased by 1.2 percentage points to 78.2% of available capacity in July. Capacity utilisation has averaged 76.6% over the past 12 months.

PRICES SUB-INDEXES

  • Input price rises moderated in July, with the sub-index for input prices falling by 0.4 points to 58.9 points. Respondents continue to single out high energy costs as a key source of input cost pressures at present, across a wide range of services sub-sectors.
  • The wages sub-index weakened by 1.2 points to 55.1 points in July, indicating moderating pressure on wages across the services sector. This sub-index has indicated expansion (results over 50 points) for the past year, albeit at a slower average rate of expansion (55.8 points) than the long-run average for this sub-index (56.7 points on average since June 2009).
  • The sub-index for selling prices fell by 2.9 points to 49.1 points and into contraction in July. Selling prices continue their weak run in the Australian PSI® reflecting a fiercely competitive market that can make it difficult for services sector businesses to raise their selling prices due to a background of low inflation and stiff local and global competition.

Australian Industry Group, “Performance of Services Index. Jul 2017“, 3 Aug 2017 More

flag_europe EU: Retail Trade. Jun 2017

Press Release Extract [ser_56]

In June 2017 compared with May 2017, the seasonally adjusted volume of retail trade rose by 0.5% in the euro area (EA19) and by 0.4% in the EU28, according to estimates from Eurostat, the statistical office of the European Union. In May the retail trade volume increased by 0.4% in the euro area and by 0.3% in the EU28.

In June 2017 compared with June 2016 the calendar adjusted retail sales index increased by 3.1% in both zones.

eu_retail_20170803

Monthly comparison by retail sector and by Member State

The 0.5% increase in the volume of retail trade in the euro area in June 2017, compared with May 2017, is due to rises of 1.0% for automotive fuel, of 0.7% for “Food, drinks and tobacco” and of 0.3% for non-food products. In the EU28, the 0.4% increase in the volume of retail trade is due to rises of 0.6% for both automotive fuel and non-food products, and of 0.1% for “Food, drinks and tobacco”.

Among Member States for which data are available, the highest increases in the total retail trade volume were registered in Croatia (+5.8%), Portugal (+2.4%) and Slovenia (+1.7%), while the largest decreases were observed in Lithuania (-1.7%), Latvia (-0.8%) and Bulgaria (-0.5%).

Annual comparison by retail sector and by Member State

The 3.1% increase in the volume of retail trade in the euro area in June 2017, compared with June 2016, is due to rises of 3.5% for automotive fuel, of 3.2% for non-food products and of 2.6% for “Food, drinks and tobacco”. In the EU28, the 3.1% increase in retail trade volume is due to rises of 3.9% for non-food products, of 3.7% for automotive fuel and of 2.0% for “Food, drinks and tobacco”.

Among Member States for which data are available, the highest increases in the total retail trade volume were registered in Slovenia (+10.2%), Croatia (+8.2%) and Slovakia (+8.1%), while a decrease was observed in Luxembourg (-25.8%).

Eurostat, “Retail Trade. Jun 2017“, 3 Aug 2017 More

flag_europe EU: Eurozone Composite PMI. Jul 2017

Press Release Extract [ser_64]

Key findings:

  • Final Eurozone Composite Output Index: 55.7 (Flash: 55.8, June Final: 56.3)
  • Final Eurozone Services Business Activity Index: 55.4 (Flash: 55.4, June Final: 55.4)

eu_psi_20170803

The eurozone economy made a solid start to the third quarter. Although July saw rates of expansion in business activity and new work moderate, growth in both remained among the best registered over the past six years.

The final IHS Markit Eurozone PMI® Composite Output Index posted a six-month low of 55.7 in July, down from 56.3 in June and the earlier flash estimate of 55.8. The headline index has signalled expansion throughout the past 49 months.

The expansion was once again broad-based by both sector and nation. July was the second successive month that all of the national manufacturing and service sector surveys covered registered higher levels of output.

The strongest rates of expansions in overall (combined manufacturing and service sector) output were seen in Ireland and Spain, despite both nations seeing slower growth in July.

Weaker increases were also registered in Germany and France. Italy was the only nation covered to see overall activity rise at a quicker pace, and one of the best achieved over the past decade.

Growth of euro area manufacturing output continued to outpace that of service sector activity, despite the rate of increase in production volumes slipping to a six-month low. Growth in services output was unchanged at June’s five-month low.

Underpinning the latest rise in economic activity was a further solid increase in new business. This in turn tested capacity – as highlighted by backlogs of work rising at one of the fastest rates in the past six years – leading to further job creation.

Recent months have seen the pace of growth in staffing levels hold broadly steady at rates last achieved around a decade ago. July saw job creation accelerate in Germany and Italy, but slow in France, Spain and Ireland.

Companies maintained an optimistic outlook during July. Although the overall degree of optimism eased to a six-month low, it remained above its long-run trend at service providers and close to June’s series-record high at manufacturers.

Input prices and output charges continued to rise in July. However, rates of increase eased to eight- and six-month lows respectively.

Services

July saw the solid upturn in the eurozone service sector continue, as companies reported increases in business activity, new orders and employment.

At 55.4 in July, unchanged from the earlier flash estimate, the final IHS Markit Eurozone PMI® Services Business Activity Index signalled that output has now expanded throughout the past four years. Although the rate of growth was identical to June’s five-month low, it remained above the long- run average and among the best registered over the past six years.

All of the nations covered by the survey signalled increases in both business activity and new orders during July. Ireland saw the fastest increases in both, with rates of expansion recovering most of the momentum lost in June.

Italy also saw output and new business rise at quicker rates. Activity expanded at the sharpest pace in nearly ten years, underpinned by the strongest intakes of new work since mid-2006.

The expansions in new work and output signalled in Germany, France and Spain were all slower than in the prior survey month. Growth of business activity eased to a ten-month low in Germany, the weakest in six months in France and a two-month low in Spain.

July data signalled that growth of new business at eurozone service providers was slightly quicker than in the prior two months. This tested capacity, leading to a modest increase in backlogs of work.

The combination of rising levels of new orders and outstanding business encouraged job creation. Despite easing slightly in July, the trend in staff hiring in recent months has been the best seen during the past decade. Jobs growth improved in Germany, Italy and Ireland, but slowed in France and Spain.

July data signalled little change in price pressures, with rates of input cost and output charge inflation similar to those seen in the prior survey month. Service charges rose in Germany, Spain and Ireland, but fell in France and Italy.

Chris Williamson, Chief Business Economist at IHS Markit said:

“The surveys indicated a slight cooling in the pace of growth in July, but this is still an encouragingly upbeat picture of business conditions. The elevated PMI reading puts the eurozone economy on course for another strong quarter, the data being historically consistent with a very respectable 0.6% qr/qr increase in GDP.

“Of the four largest euro members, only Italy recorded faster growth in July, pushing the PMI into territory consistent with 0.5% quarterly GDP growth. Spain nevertheless continued to record the strongest overall expansion, with the PMI indicative of 0.9% growth.

“The slowdown in Germany meant it registered the weakest increase in activity of the four largest euro countries for the first time in over 12 years, though the ten-month low PMI reading still points to a 0.4- 0.5% GDP growth rate.

“A loss of momentum in France also pushes the PMI down to a level broadly consistent with 0.4- 0.5% growth.

“While all countries continued to see ongoing robust growth as we move into the second half of 2017, the overall slowing in the rate of expansion will add a note of caution to ECB policymaking, though the underlying message is likely to be one of guarded optimism about the outlook.”

IHS Markit, “Eurozone Composite PMI. Jul 2017“, 3 Aug 2017 More

flag_usa US: Unemployment Insurance Weekly Claims Report

Press Release Extract [ser_4]

insurance

In the week ending July 29, the advance figure for seasonally adjusted initial claims was 240,000, a decrease of 5,000 from the previous week’s revised level. The previous week’s level was revised up by 1,000 from 244,000 to 245,000. The 4-week moving average was 241,750, a decrease of 2,500 from the previous week’s revised average. The previous week’s average was revised up by 250 from 244,000 to 244,250.

unemployment

The advance seasonally adjusted insured unemployment rate was 1.4 percent for the week ending July 22, unchanged from the previous week’s unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending July 22 was 1,968,000, an increase of 3,000 from the previous week’s revised level. The previous week’s level was revised up 1,000 from 1,964,000 to 1,965,000. The 4-week moving average was 1,964,750, an increase of 750 from the previous week’s revised average. The previous week’s average was revised up by 250 from 1,963,750 to 1,964,000.

Employment and Training Administration, “Unemployment Insurance Weekly Claims Report“, 3 Aug 2017 (08:30) More

flag_usa US: Full Report on Manufacturers’ Shipments, Inventories and Orders. Jun 2017

Press Release Extract [ser_53]

Summary

New orders for manufactured goods in June, up following two consecutive monthly decreases, increased $14.0 billion or 3.0 percent to $481.1 billion, the U.S. Census Bureau reported today. This followed a 0.3 percent May decrease. Shipments, down following two consecutive monthly increases, decreased $0.9 billion or 0.2 percent to $471.5 billion. This followed a 0.3 percent May increase. Unfilled orders, up three of the last four months, increased $14.2 billion or 1.3 percent to $1,135.7 billion. This followed a 0.1 percent May decrease. The unfilled orders-to-shipments ratio was 6.83, up from 6.74 in May. Inventories, up seven of the last eight months, increased $1.0 billion or 0.2 percent to $649.1 billion. This followed a 0.2 percent May decrease. The inventories-to-shipments ratio was 1.38, up from 1.37 in May.

New Orders

New orders for manufactured durable goods in June, up following two consecutive monthly decreases, increased $14.8 billion or 6.4 percent to $245.8 billion, down from the previously published 6.5 percent increase. This followed a virtually unchanged May decrease. Transportation equipment, also up following two consecutive monthly decreases, led the increase, $14.7 billion or 19.0 percent to $91.7 billion. New orders for manufactured nondurable goods decreased $0.8 billion or 0.3 percent to $235.3 billion.

us_durables_20170803

Shipments

Shipments of manufactured durable goods in June, down three of the last four months, decreased $0.1 billion or virtually unchanged to $236.2 billion, virtually unchanged from the previously published decrease. This followed a 1.3 percent May increase. Transportation equipment, down five of the last six months, drove the decrease, $0.4 billion or 0.5 percent to $78.8 billion. Shipments of manufactured nondurable goods, down three of the last four months, decreased $0.8 billion or 0.3 percent to $235.3 billion. This followed a 0.6 percent May decrease. Petroleum and coal products, down five consecutive months, drove the decrease, $1.1 billion or 2.7 percent to $39.8 billion.

Unfilled Orders

Unfilled orders for manufactured durable goods in June, up three of the last four months, increased $14.2 billion or 1.3 percent to $1,135.7 billion, virtually unchanged from the previously published increase. This followed a 0.1 percent May decrease. Transportation equipment, also up three of the last four months, led the increase, $12.8 billion or 1.7 percent to $776.8 billion.

Inventories

Inventories of manufactured durable goods in June, up eleven of the last twelve months, increased $1.8 billion or 0.5 percent to $397.4 billion, up from the previously published 0.4 percent increase. This followed a 0.2 percent May increase. Machinery, up seven of the last eight months, led the increase, $0.9 billion or 1.3 percent to $68.4 billion. Inventories of manufactured nondurable goods, down four consecutive months, decreased $0.8 billion or 0.3 percent to $251.7 billion. This followed a 0.7 percent May decrease. Petroleum and coal products, also down four consecutive months, drove the decrease, $1.2 billion or 3.4 percent to $33.4 billion. By stage of fabrication, June materials and supplies increased 0.6 percent in durable goods and decreased 0.6 percent in nondurable goods. Work in process decreased 0.1 percent in durable goods and increased 0.6 percent in nondurable goods. Finished goods increased 1.1 percent in durable goods and decreased 0.5 percent in nondurable goods.

US Census Bureau, “Full Report on Manufacturers’ Shipments, Inventories and Orders. Jun 2017“, 3 Aug 2017 More

flag_usa US: Non-Manufacturing ISM Report On Business. Jul 2017

Press Release Extract [ser_59]

The NMI® registered 53.9 percent, which is 3.5 percentage points lower than the June reading of 57.4 percent. This represents continued growth in the non-manufacturing sector at a slower rate.
The Non-Manufacturing Business Activity Index decreased to 55.9 percent, 4.9 percentage points lower than the June reading of 60.8 percent, reflecting growth for the 96th consecutive month, at a slower rate in July.
The New Orders Index registered 55.1 percent, 5.4 percentage points lower than the reading of 60.5 percent in June.
The Employment Index decreased 2.2 percentage points in July to 53.6 percent from the June reading of 55.8 percent.
The Prices Index increased 3.6 percentage points from the June reading of 52.1 percent to 55.7 percent, indicating prices increased in July for the second consecutive month.
According to the NMI®, 15 non-manufacturing industries reported growth.
The non-manufacturing sector did not sustain the previous rate of growth and cooled-off in July.
The majority of respondents’ comments were mostly positive about business conditions and the state of the economy.

Institute for Supply Management, “Non-Manufacturing ISM Report On Business. Jul 2017“, 3 Aug 2017 (10:00) More

flag_usa US: Markit US Services PMI (Final). Jul 2017

Press Release Extract [ser_58]

Key findings:

  • Solid increase in business activity
  • New business expands at quickest rate for two years
  • Workforce numbers increase at fastest pace in 2017 so far

us_psi_20170803

July survey data signalled a solid expansion in business activity among US service providers. New orders received by firms increased at the fastest pace for two years, which in turn contributed to a stronger rise in backlogs of work. As a result, firms increased their staff numbers at the quickest pace since last December. At the same time, inflationary pressures remained relatively strong, and business confidence suggestive of ongoing expansion in coming months.

The seasonally adjusted IHS Markit U.S. Services Business Activity Index registered 54.7 in July, up from 54.2 in June. The latest reading signalled the largest expansion of business activity since January and the fourth consecutive month of accelerated growth. Despite being marginally below the long- run series average, the latest upturn in activity was solid overall.

Increased business activity at service sector firms was supported by a further expansion in new business. July data indicated that the pace of new order growth was the strongest in two years. A number of panel members noted that new marketing strategies were effective in securing new clients.

In line with upturns in both business activity and new orders, service providers expanded their payroll numbers at a marked and accelerated pace. The rate of job creation was the strongest so far this year. However, capacity pressures persisted, as shown by a further increase in the level of outstanding business. Though modest, the rate of backlog accumulation was the strongest seen for nine months.

July survey data indicated robust business confidence among service providers. Optimism was built upon marked improvements in overall activity and new business, while some firms linked positive sentiment to improving conditions and strengthening client demand. This was despite the overall level of confidence slipping from June’s five- month high.

Input costs paid by service providers continued to rise in July, thereby extending the trend seen every month since data collection began in October 2009. The pace was solid overall, with firms stating that higher demand for raw materials at suppliers had often pushed purchase costs up. That said, the pace of input cost inflation eased from June’s two- year high.

Average prices charged by service sector firms also increased at a weaker pace than the previous survey period. Notably, panellists stated that increased client demand had enabled some firms to raise their charges in July.

IHS Markit Final U.S. Composite PMI™

us_psi_composite_20170803

The final seasonally adjusted IHS Markit U.S. Composite PMI™ Output Index rose to 54.6 in July, up from 53.9 in the previous month.

The latest composite figure signalled a pick up in momentum supported by stronger output growth in both the manufacturing and service sectors. Manufacturers and service providers saw rates of expansion improve to four- and six-month highs, respectively.

Overall, July’s composite index figure indicated the quickest increase in US business activity since January.

The composite index is based on original survey data from the IHS Markit U.S. Services PMI and the IHS Markit U.S. Manufacturing PMI.

Commenting on the PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:

‘The PMI surveys have now shown growth accelerating for four consecutive months, meaning the economy started the third quarter with the strongest momentum since January. This is also a broad-based improvement, with the upturn in service sector activity coming on the heels of news of faster manufacturing growth.
‘With inflows of new business into the vast service sector rising at the fastest rate for two years, the survey data support the view that the economy is on course for solid growth in the third quarter. At current levels, the surveys are indicative of GDP rising at an annualised rate of approximately 2%, but if growth accelerates further in line with the upturn in new business, the third quarter could be even stronger.
‘Hiring meanwhile remains encouragingly buoyant, with the July PMI surveys indicating a payroll rise in the region of 200,000. Firms retained a strong hiring appetite in response to widespread optimism of future growth and the need to deal with rising backlogs of existing orders, underscoring the current positive mood in the business sector.’

IHS Markit, “IHS Markit U.S. Services PMI™ – final data (with composite PMI™). Jul 2017“, 3 Aug 2017 (09:45) More

Global. JPMorgan Global Services PMI. Jul 2017

Press Release Extract [ser_60]

The global service sector continued to expand at a solid pace in July. At 53.7, little-changed from readings in the prior four months, the J.P.Morgan Global Services Business Activity Index – a composite index produced by J.P.Morgan and IHS Markit in association with ISM and IFPSM – remained above the neutral mark of 50.0.

global_psi_20170803

Worldwide service sector activity has now risen throughout the past eight years, with the current rate of expansion mildly above the average for that sequence.

Output growth was registered across the business, consumer and financial service sectors. The steepest increase was again seen in the latter. A solid expansion was also signalled in the business services category, whereas the rise in activity at consumer service providers was only modest in comparison.

By region, the euro area, the US, the UK and Australia all saw solid increases in business activity, whereas the service economies in Asia tended to struggle. Growth held steady in both the eurozone and Australia, while accelerations were seen in the US (six-month high) and the UK (two-month high).

In contrast, rates of expansion slowed in both China and Japan, while India signalled contraction for the first time in six months. Growth also slowed sharply in Russia, and Brazil saw output decrease for the third straight month.

Underpinning the latest increase in output were stronger inflows of new work. New orders rose at the joint-fastest pace during the past two years, leading to one of the steepest increases in backlogs of work in a decade.

This combination of improving demand and the resultant pressure on capacity led to a further increase in employment. Staffing levels have now risen in each of the past 89 months, with the rate of job creation the steepest since May 2015. Employment rose in the eurozone, the US, China, Japan, the UK, Australia and Russia, but fell in Brazil and India.

July saw a slight easing in price inflationary pressures. Rates of increase in average costs and output charges slowed to five- and three-month lows respectively.

Commenting on the survey, David Hensley, Director of Global Economic Coordination at J.P.Morgan, said:

‘The July PMI data show the global service sector continuing to achieve a solid and stable rate of expansion at the start of the third quarter. The current combination of stronger new order inflows, rising backlogs of work and increased employment all point to this steady growth path being sustained into the coming months.’

J.P.Morgan and IHS Markit in association with ISM and IFPSM, “J.P.Morgan Global Services PMI™. Jul 2017“, 3 Aug 2017 (11:00) More

Global: JPMorgan Global Composite PMI. Jul 2017

Press Release Extract [ser_70]

Global economic growth eased slightly for the second successive month in July. The J.P.Morgan Global All- Industry Output Index – which is produced by J.P.Morgan and IHS Markit in association with ISM and IFPSM – posted 53.5, down from 53.7 in June. The rate of expansion nonetheless remained solid and relatively stable, to suggest a positive start to the third quarter.

global_psi_composite_20170803

Developed markets were (on average) the steadying influence in July. Output across these nations rose at a robust rate that was broadly unchanged from those registered during the first half of the year.

The euro area remained a bright spot. Although the rate of output expansion across the currency union eased to a six-month low, the region is still undergoing one of its strongest growth spells over the past six years. The US and the UK meanwhile saw mild accelerations. Growth remained elevated in Australia (despite easing slightly), but slowed to a nine-month low in Japan.

Emerging markets continued to struggle compared to the performance of developed nations. Composite PMI Output Index readings for China, India, Russia and Brazil were all below the global average, albeit only slightly in the case of Russia. A positive note was a modest improvement in the pace of expansion in China to a four-month high, but this was offset by contractions in India and Brazil.

By sector, growth of global services activity slightly outpaced that of manufacturing output for the fourth month in a row. However, both sectors saw minor slowdowns in their respective rates of expansion since June.

The rate of expansion in global all-industry new orders ticked up to the fastest in six months during July. This tested capacity and led to the second-steepest increase in backlogs of work for over three-and-a-half years.

Companies were encouraged by the sustained upturn to increase staffing levels, with the pace of jobs growth among the best seen during the current 89-month sequence of increase. Employment rose in the euro area, the US, Japan, the UK, Australia and Russia. Job cuts were registered in China, India and Brazil.

July saw no change in the rate of cost inflation, although the pace remained slower than the average for the year- to-date. Part of the increase in input prices was passed on to clients, leading to a further rise in average output charges. However, the rate of selling price inflation eased slightly from June’s three-month high.

Companies maintained a positive outlook for the coming year in July. However, the overall degree of optimism dipped to its lowest in the year-so-far. Service providers were slightly more positive that manufacturers.

Commenting on the survey, David Hensley, Director of Global Economic Coordination at J.P.Morgan, said:

‘The start of the third quarter saw the global economy maintain its solid and steady growth path. Although output increased at a slightly reduced pace, accelerated growth of new orders, backlogs of work and employment suggests that the current pace of economic expansion will be sustained during the coming months.’

J.P.Morgan and IHS Markit in association with ISM and IFPSM, “JPMorgan Global Composite PMI. Jul 2017“, 3 Aug 2017 (11:00) More

flag_japan Japan update

Nikkei Japan Services PMI. Jul 2017

Press Release Extract [ser_jp_psi]

Key points:

  • Both activity and new work rise at slower rates
  • Capacity pressures sustained; workforce numbers rise
  • Confidence dips to lowest level since February

jp_psi_20170803

Growth of the Japanese service sector was maintained during July, extending the current run of expansion to ten months. New orders also continued to rise, albeit at a slower rate, whilst capacity pressures led to a further increase in backlogs. Workforce numbers were expanded in response to higher workloads and in line with ongoing optimism regarding future activity levels.

On the price front, average input costs continued to increase, largely due to rising employment expenses, but there was a fractional decline in output charges recorded, the first time that companies have lowered their prices in 2017 so far.

The headline seasonally adjusted Business Activity Index recorded 52.0 during July to signal growth in activity for the tenth successive month. However, falling from 53.3 in June, the degree to which activity increased was moderate and the lowest since February.

There was a concurrent slowdown in the rate of growth of Japanese manufacturing production. This meet that the Nikkei Composite Output Index fell to 51.8 in July, down from 52.9 in June and the lowest reading recorded since last October.

Increased service sector activity was closely linked to further gains in incoming new business. July’s survey showed that volumes of new work rose for a twelfth successive month. Growth was solid, albeit a little softer than rates seen during May and June. Panellists commented on increased demand, new store openings and promotional activities as reasons for the upturn in new work.

Similar to the trend seen for output, manufacturers also saw a weaker increase in levels of new orders. The respective composite index subsequently fell to a three-month low.

Capacity indicators showed that pressure on resources continued during July. Service sector backlogs of work rose for the eighth successive month, with latest data showing growth at the strongest recorded by the survey since April 2015. Panellists responded by adding to their workforce numbers for a seventh successive month.

Manufacturers also added to their payroll numbers, with the rate of growth again solid and above that signalled in the service sector.

Average input prices in the service sector rose again in July, maintaining a trend that extends back to November 2012. Companies reported that higher labour costs had driven up overall operating expenses. The rate of inflation was, however, down on June’s recent high and the slowest recorded by the survey since April. Meanwhile, output charges were reduced slightly, the first such occurrence of the year so far.

Manufacturers reported ongoing inflation of input prices during July, and continued to raise their own output charges at a marginal pace.

Finally, confidence regarding the year ahead remained inside positive territory during the latest survey period. A number of companies are forecasting a boost in sales and demand over the next 12 months, whilst new store openings should also bolster activity. However, the net level of optimism was the lowest recorded by the survey since February.

Commenting on the Japanese Services PMI survey data, Paul Smith, Director at IHS Markit, which compiles the survey, said:

‘The Japanese private sector made a solid, albeit unspectacular, start to the third quarter of the year, with growth being maintained, but at the slowest rate since last October. Weaker expansion was registered across both manufacturing and service sectors in line with weaker gains in new business compared to previous months.

‘Nonetheless, highlighting the generally steady and benign growth environment, companies continue to add to their payroll numbers at a steady clip as positive expectations for output and demand over the coming months were maintained.’

IHS Markit, “Nikkei Japan Services PMI® (with Composite PMI data)“, 3 Aug 2017 More

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flag_china China update

Caixin China General Services PMI™. Jul 2017

Press Release Extract [ser_cn_psi]

Key points:

  • Stronger manufacturing output growth contrasts with further slowdown in services activity
  • Composite new business expands at quickest pace for four months
  • Total employment continues to decline, led by job cuts at manufacturers

cn_psi_20170803

The Caixin China Composite PMI™ data (which covers both manufacturing and services) signalled an improvement in the rate of Chinese business activity growth at the start of the third quarter. This was shown by the Composite Output Index rising from June’s recent low of 51.1 to a four-month high of 51.9 in July.

The stronger increase in total business activity was supported by a sustained upturn in manufacturing production, which in turn increased at the quickest rate in five months in July. In contrast, service sector activity expanded at a modest pace that was the joint-weakest since May 2016 (on par with April 2017). This was shown by the seasonally adjusted Caixin China General Services Business Activity Index posting 51.5, down fractionally from 51.6 in June.

New business also expanded at a weaker pace across the service sector in July. Furthermore, the rate of growth edged down to the least marked for 16 months, with some panellists linking relatively subdued sales to lower client numbers. In line with the trend for output, new work placed at manufacturers increased at a quicker pace at the start of the third quarter. This offset the slowdown in new order growth at services companies and led composite new business to rise at the quickest pace in four months.

Employment trends continued to diverge across both monitored sectors in July. Services companies added to their payroll numbers for the eleventh month running, while manufacturing staffing levels continued to decline. That said, the rate of job creation at services companies held close to June’s ten-month low and remained marginal. Meanwhile, workforce numbers at goods producers declined at the fastest pace since September last year. As a result, total employment fell for the four successive month, albeit marginally.

Chinese service providers signalled a third successive monthly rise in outstanding business during July. However, the rate of accumulation was similar to those seen in May and June and only slight. Manufacturers also noted higher amounts of work-in-hand (but not yet completed), with the rate of expansion little-changed from the previous month and moderate. Overall, backlogs of work increased modestly at the composite level at the start of the third quarter.

Average input costs continued to increase across China’s service sector in July, though the rate of inflation weakened since June. Furthermore, the rate of inflation was the weakest seen for nearly a year and only slight. In contrast, the rate of cost inflation picked up to a solid pace across the manufacturing sector amid reports of higher raw material prices. Consequently, composite input prices rose at the strongest pace for three months in July.

Latest survey data signalled a further marginal increase in prices charged by Chinese services companies at the start of the third quarter. Manufacturing firms also raised their selling prices, and at a quicker pace than in June. Firms across both monitored sectors commented on increasing their output charges to reflect higher input costs. At the composite level, prices charged increased at a modest pace that was the fastest since March.

Confidence towards the one-year business outlook moderated across both the manufacturing and service sectors during July. Furthermore, the level of positive sentiment dipped to an 11-month low at goods producers, while service providers expressed the weakest level of optimism since last November.

Commenting on the China General Services PMI™ data, Dr. Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group said:

‘The Caixin China General Services Business Activity Index fell 0.1 point from the previous month to 51.5 in July, on par with April’s reading that marked the weakest pace of expansion since May 2016. The index of new business edged down and the input costs index fell to its lowest level for nearly a year, while prices charged rose marginally. The Composite Output Index came in at 51.9, up 0.8 points from a month ago and the highest figure since March. China’s economic performance in July was stronger than expected, mainly due to sustained recovery in the manufacturing sector. However, downward pressure on the economy likely remains as the index gauging companies’ confidence towards the 12-month business outlook dropped in both the manufacturing and services industries.’

IHS Markit, “Caixin China General Services PMI™“, 3 Aug 2017 More

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