Fri 1 Sep 2017


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watch Bloomberg: Disappointing jobs report: McKee. watch Richards, Daco watch Gross watch Sweeney, Riccadonna

In Portfolioticker today

read_this Today at the stock market

bull/bearWall Street gained modestly on Friday as a tepid U.S. jobs report kept expectations muted for another interest rate hike this year, while investors kicked off a typically dour month for stocks on a positive note.

The S&P 500 hovered near all-time highs as major stock indexes marked gains for a second straight week. The Nasdaq tallied a record closing high after minting its best week of the year. The benchmark S&P had posted a 0.06 percent gain in August, its most sluggish monthly performance since March’s slight decline. September ranks as the worst month for stocks, according to the Stock Trader’s Almanac.

  • The S&P 500 gained 4.9 points, or 0.20%, to 2,476.55.
  • The Dow Jones Industrial Average rose 39.46 points, or 0.18%, to end at 21,987.56
  • The Nasdaq Composite added 6.67 points, or 0.1%, to 6,435.33.
  • Advancing issues outnumbered declining ones on the NYSE by a 2.30-to-1 ratio; on Nasdaq, a 1.92-to-1 ratio favored advancers.
  • About 5.1 billion shares changed hands in U.S. exchanges, below the 5.8 billion daily average over the last 20 sessions.

U.S. job growth slowed more than expected in Aug 2017 after 2 straight months of hefty increases. The Labor Department said on Friday nonfarm payrolls increased by 156,000 in Aug 2017, while economists had forecast an increase of 180,000.

Following the data, traders were betting on a 39% chance that the Federal Reserve would raise rates at its December meeting, similar to bets earlier in the week, according to the CME Group’s FedWatch tool.

“The latest economic data that came out today … didn’t provide information to the Fed that they need to go out and raise interest rates,” said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana.

“The data kind of continued to show this Goldilocks-type situation, which the market tends to like,” Carlson said. “It’s not too hot, it’s not too cold.”

Market watchers were also digesting other economic data. U.S. construction spending unexpectedly fell in Jul 2017, hitting a nine-month low, but the Institute for Supply Management said its index for factory activity soared to 58.8 in Aug 2017, the highest reading since Apr 2011.

“The markets are up, I think, because the economic data that has been released is still supportive of economic growth, still supportive of earnings growth, which ultimately is going to drive stock prices,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.Reuters

Market indices

Market indices
^ Market indices today (mouseover for 12 month view) Chart: Google Finance

:-) The NASDAQ Composite Index closed on a record high of 6,435.33 up 0.10% on yesterday’s record of 6,428.66.

Index Ticker Today Change 31 Dec 16 YTD
S&P 500 SPX (INX) 2,476.55 +0.19% 2,238.83 +10.61%
DJIA INDU 21,987.56 +0.17% 19,762.60 +11.25%
NASDAQ IXIC 6,435.33 +0.10% 5,383.12 +19.54%

read_this Portfolio Indices

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 2.889 -0.04% 2.105 +37.26%
Valuation Rate USD/AUD 0.80173 +0.23% 0.72663 +10.33%
AUD-denominated Index AUD 3.607 -0.27% 2.895 +24.58%

Portfolio stock prices

:-) Apple closed on a record $164.05, up 0.03% (5 cents) on yesterday’s record of $164.00.

Top 4 market caps in our portfolio:

  1. Apple: $847.36 bn = AUD 1.064 trillion (AUD = USD 0.79673)
  2. Google (GOOGL): $659.61 bn
  3. Facebook: $499.58 bn
  4. Amazon: $489.93 bn
Stock Ticker Today Change 31 Dec 16 YTD
Alphabet A GOOGL $951.99 -0.34% $792.45 +20.13%
Alphabet C GOOG $937.34 -0.21% $771.82 +21.44%
Apple AAPL $164.05 +0.03% $115.82 +41.64%
Amazon AMZN $978.25 -0.24% $749.87 +30.45%
Ebay EBAY $36.35 +0.61% $29.69 +22.43%
Facebook FB $172.02 +0.03% $115.05 +49.51%
PayPal PYPL $61.46 -0.36% $39.47 +55.71%
Twitter TWTR $16.86 -0.30% $16.30 +3.43%
Visa V $103.90 +0.37% $78.02 +33.17%
VMware VMW $107.48 -0.57% $78.73 +36.51%

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) was little changed after trading near its lowest level in more than 2 years.
The EUR fell 0.4% to USD 1.1863 after Bloomberg News reported that the European Central Bank may not be ready to finalize its decision on next year’s bond-purchase plan until before the current program expires.
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 EDT

  • NYMEX West Texas Intermediate (WTI): $47.32/barrel +0.19% Chart
  • ICE (London) Brent North Sea Crude: $52.74/barrel -0.23% Chart
  • NYMEX Natural gas futures: $3.06/MMBTU +0.56% Chart

flag_usa US: Insights into Working With President Trump

Here are five reports from Bloomberg and the New York Times released today offering insights into what it may be like working with President Trump (referred without comment):

  • Does Anyone on Trump’s Team Take Him Seriously?“, 1 Sep 2017 Bloomberg
  • Trump Aide Who Delivered Letter Firing Comey Plans to Quit, Source Says“, 1 Sep 2017 Bloomberg
  • Mueller Has Early Draft of Trump Letter Giving Reasons for Firing Comey“, 1 Sep 2017 NY Times Article
  • Trump Again Lashes Out at Comey’s Handling of Clinton Investigation“, 1 Sep 2017 NY Times Article
  • Forceful Chief of Staff Grates on Trump, and the Feeling Is Mutual“, 1 Sep 2017 NY Times Article

flag_australia Commonwealth Bank PMI. Aug 2017

Press Release Extract [au_pmi]

Growth of Australia’s manufacturing sector was sustained during August, but at the slowest rate for a year. Output, new orders and employment all recorded their weakest gains in the past 12 months, with sectoral expansion undermined in part by a slight drop in new export orders: the first recorded by the survey to date. Business confidence, however, remained elevated, whilst input prices rose to a much lesser degree.

au_pmi_20170901

The headline index from the survey, the seasonally adjusted Commonwealth Bank Manufacturing Purchasing Managers’ Index™ (PMI®) – a composite indicator designed to measure the performance of the manufacturing economy – weakened to a level of 53.5 in August (down from 54.4 in July). Although growth has been sustained throughout the survey history (data were first collected in May 2016), the latest reading indicated the weakest improvement in operating conditions for a year.

Both manufacturing output and total new orders rose at rates that were the slowest recorded by the survey since August 2016. That said, in both cases, growth remained relatively marked amid reports of ongoing underlying demand strength, particularly from domestic sources. Moreover, panellists retain a strong degree of optimism that production will continue to rise: over 65% of the survey panel are forecasting an increase in output over the next 12 months.

Undermining overall sales wins in August (and production) was a softening in new export orders. Latest data showed a marginal fall, the first time a decline in exports has been recorded in 16 months of data collection. There were reports that demand from overseas had waned, with clients noted to be purchasing less compared to earlier in the year.

That said, there were some reports from manufacturers of having insufficient capacity to take on extra work. This was highlighted by further growth in backlogs of outstanding business in August and also encouraged firms to charge more for their output. Average output prices rose to the greatest degree since May and at a rate above that seen for input costs, implying a boost to margins. Although prices for a variety of foodstuffs were
noted to have risen in price, a strong Australian dollar reportedly limited inflation.

Finally, companies continued to recruit additional workers in August, albeit to the weakest degree in the current 12-month period of expansion.

Commenting on the Commonwealth Bank Manufacturing PMI data, Michael Blythe, Chief Economist at the Commonwealth Bank, said:

“The stepdown in PMI readings in August follows that in July and suggests some modest slowing in manufacturing activity in the September quarter. The slowing is connected in part with a step down in new export orders. And this pullback underlies recent RBA concerns that a stronger AUD is weighing on the outlook for domestic output and employment.”

“More disappointing, however, are the reports from some panellists that capacity constraints are holding back output. The backlog of work lifted again in August and delivery times lengthened. The reluctance of business to lift capex in recent years may limit our ability to fully benefit from an improving global economy and solid underlying domestic backdrop. So the latest data on capex is encouraging.”

IHS Markit, “Commonwealth Bank Manufacturing PMI. Aug 2017“, 1 Sep 2017 More

flag_europe EU: Eurozone Manufacturing PMI. Aug 2017

Press Release Extract [ser_64]

Key findings:

  • Final Eurozone Manufacturing PMI at 57.4 in August (Flash: 57.4, July Final: 56.6)
  • Output growth accelerates, boosted by robust domestic demand and rising new export orders
  • Broad-based expansion led by solid core of Austria, the Netherlands and Germany

August saw a strong and accelerated increase in eurozone manufacturing production, as robust demand and rising employment underpinned a solid improvement in overall operating conditions.

The final IHS Markit Eurozone Manufacturing PMI® rose to 57.4, up from 56.6 in July and equalling June’s 74-month high. The PMI has remained above the 50.0 no-change mark for 50 successive months, with the latest reading unchanged from its earlier flash estimate.

The expansion was led by a strong core of Germany, the Netherlands and Austria. PMI readings for Austria and the Netherlands both hit 78-month highs, while the rate of growth signalled for Germany was among the best registered since early-2011. These nations also recorded the steepest increases in output and new orders.

The other countries covered by the survey also saw business conditions improve during August. Italy, Ireland and France were mid-ranked in the PMI growth table, with rates of expansion improving across all three. Greece remained at the bottom of the rankings, but nonetheless saw growth accelerate to a nine-year high. Only Spain saw its rate of improvement slow during August.

August saw euro area manufacturing production rise at one of the fastest rates since April 2011, bettered or equalled only by the expansions seen in May and June of this year. The trend in new order inflows also improved, with the rate of expansion similarly among the best since early-2011.

Companies generally reported that domestic market conditions remained robust in August. Growth in new export business also underpinned the rise in new work intakes, with export orders rising at the quickest pace in six-and-a-half years.

Foreign demand improved in all of the nations covered by the survey, including a mild increase in Greece for the first time in a year. Growth of new export business at German manufacturers was the strongest since May 2010. Rates of increase also accelerated in France, Italy, the Netherlands, Austria and Ireland.

The solid upswing in new order intakes exerted pressure on capacity, leading backlogs of work to rise at the third-fastest rate in the series history. This encouraged further job creation, with the rate of growth in staffing levels staying close to May’s survey-record high.

Employment rose in all of the nations covered during August. The steepest increases were signalled in Austria, the Netherlands and Germany. However, only Italy, Austria and Greece reported sharper rates of expansion than in the prior month.

Pressure on capacity was also evident at suppliers, as average vendor delivery times lengthened to the greatest extent since April 2011. Companies linked this to rising demand for raw materials and shortages developing for a number of inputs. Further reinforcing this was the trend in purchasing activity at manufacturers, as input buying volumes rose at the steepest pace in over six years.

Price pressures strengthened in August. Input cost inflation accelerated for the first time in six months to the highest since May, while charges also rose at a faster rate than in July. Alongside higher commodity prices, overall input costs also rose due to supply chain pressures.

Finally, euro area manufacturers maintained a positive outlook for the sector during August. Output volumes are expected to be higher in one year’s time, with all of the nations covered by the survey reporting a positive forecast. That said, the degree of business confidence dipped to an eight-month low.

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

“The eurozone’s impressive manufacturing upturn regained momentum in August, with a summer surge in factory activity suggesting rising goods production will support another strong GDP reading in the third quarter.

“The survey indicates that euro area manufacturing output is growing at an annual rate of approximately 4%. Producers across the region are benefitting from rising domestic demand as economic recoveries gain momentum, as well as surging export sales.

“The recent strengthening of the euro may curb export growth from its current six-and-a-half year high, and optimism about the year ahead has cooled since earlier in the summer, notably in France. However, the still-elevated level of confidence suggests that firms generally expect the current strong growth spell has further to run.

“Firms are also struggling to cope with existing demand: backlogs of uncompleted work are rising at the fastest rate for 11 years, and supply chains are being stretched to a degree not seen for over six years. There’s therefore a good chance that the record hiring trend will be sustained for some time to come as factories and their suppliers continue to boost capacity.

“Capacity issues are translating into both higher input costs and rising factory gate prices as demand exceeds supply for many products. The key question for policymakers is the extent to which these price pressures will feed through to consumers and wages.”

IHS Markit, “Eurozone Manufacturing PMI. Aug 2017“, 1 Sep 2017 More

flag_usa US: Employment Situation. Aug 2017

Market Comment: Reuters

U.S. job growth slowed more than expected in August after two straight months of strong gains, but the pace of increase should be more than sufficient for the Federal Reserve to announce a plan to start trimming its massive bond portfolio.

Anemic wage gain could, however, make the U.S. central bank cautious about raising interest rates again this year. The Labor Department said on Friday that nonfarm payrolls increased by 156,000 last month after rising 189,000 in July.

Average hourly earnings rose three cents or 0.1 percent after advancing 0.3 percent in July, keeping the year-on-year gain in wages at 2.5 percent for a fifth consecutive month.

August’s moderation in employment growth, which pushed payroll gains below the 176,000 monthly average for this year likely reflects a seasonal quirk as well as a dearth of qualified workers. Over the past several years, the initial August job count has tended to exhibit a weak bias, with revisions subsequently showing strength.

The department said Hurricane Harvey, which devastated parts of Texas, has no “discernable” effect on payrolls as the disaster struck after the survey period for the August employment report. Economists said the storm could hurt September payrolls if the disruption from the flooding lingers.

The unemployment rate ticked up one-tenth of a percentage point to 4.4 percent. Economists polled by Reuters had forecast payrolls increasing by 180,000 jobs last month. August’s gains were far more than the 75,000 to 100,000 jobs per month needed to keep up with growth in the working-age population.

Underscoring labor market strength, manufacturing payrolls surged by 36,000 jobs. Construction employment jumped by 28,000 jobs last month.Reuters

Press Release Extract [ser_bls1]

Total nonfarm payroll employment increased by 156,000 in August, and the unemployment rate was little changed at 4.4 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in manufacturing, construction, professional and technical services, health care, and mining.

Household Survey data

In August, the unemployment rate, at 4.4 percent, and the number of unemployed persons, at 7.1 million, were little changed. After declining earlier in the year, the unemployment rate has been either 4.3 or 4.4 percent since April.

us_ue_20170901

The number of long-term unemployed (those jobless for 27 weeks or more) was essentially unchanged in August at 1.7 million and accounted for 24.7 percent of the unemployed.

The labor force participation rate, at 62.9 percent, was unchanged in August and has shown little movement on net over the past year. The employment-population ratio, at 60.1 percent, was little changed over the month and thus far this year.

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was essentially unchanged at 5.3 million in August and has shown little movement in recent months. These individuals, who would have preferred full-time employment, were working part time because their hours had been cut back or because they were unable to find a full-time job.

In August, 1.5 million persons were marginally attached to the labor force, about the same as a year earlier. (These data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.

Among the marginally attached, there were 448,000 discouraged workers in August, down 128,000 from a year earlier. (The data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.1 million persons marginally attached to the labor force in August had not searched for work for reasons such as school attendance or family responsibilities.

Establishment Survey Data

Total nonfarm payroll employment increased by 156,000 in August. Job gains occurred in manufacturing, construction, professional and technical services, health care, and mining. Employment growth has averaged 176,000 per month thus far this year, about in line with the average monthly gain of 187,000 in 2016.

us_jobs_20170901

Manufacturing employment rose by 36,000 in August. Job gains occurred in motor vehicles and parts (+14,000), fabricated metal products (+5,000), and computer and electronic products (+4,000). Manufacturing has added 155,000 jobs since a recent employment low in November 2016.

In August, construction employment rose by 28,000, after showing little change over the prior 5 months. Employment among residential specialty trade contractors edged up by 12,000 over the month.

Employment in professional and technical services continued to trend up in August (+22,000) and has grown by 262,000 over the last 12 months. In August, job gains occurred in computer systems design and related services (+8,000).

Health care employment continued on an upward trend over the month (+20,000) and has risen by 328,000 over the year. Employment in hospitals edged up over the month (+6,000).
Mining continued to add jobs in August (+7,000), with all of the growth in support activities for mining. Since a recent low in October 2016, employment in mining has risen by 62,000, or 10 percent.

Employment in food services and drinking places changed little in August (+9,000), following an increase of 53,000 in July. Over the year, the industry has added 283,000 jobs.
Employment in other major industries, including wholesale trade, retail trade, transportation and warehousing, information, financial activities, and government, showed little change over the month.

The average workweek for all employees on private nonfarm payrolls declined by 0.1 hour to 34.4 hours in August. In manufacturing, the workweek declined by 0.2 hour to 40.7 hours, while overtime was unchanged at 3.3 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls was 33.7 hours for the fifth consecutive month.

In August, average hourly earnings for all employees on private nonfarm payrolls rose by 3 cents to $26.39, after rising by 9 cents in July. Over the past 12 months, average hourly earnings have increased by 65 cents, or 2.5 percent. In August, average hourly earnings of private-sector production and nonsupervisory employees increased by 4 cents to $22.12.

The change in total nonfarm payroll employment for June was revised down from +231,000 to +210,000, and the change for July was revised down from +209,000 to +189,000. With these revisions, employment gains in June and July combined were 41,000 less than previously reported. (Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.) After revisions, job gains have averaged 185,000 per month over the past 3 months.

Bureau of Labor Statistics, “Employment Situation. Aug 2017“, 1 Sep 2017 (08:30) More

flag_usa US: Manufacturing PMI. Aug 2017

Press Release Extract [ser_66]

Key findings:

  • Production rises at modest pace
  • Exports drag on order book growth
  • Employment increases at strongest pace in six months.

us_pmi_20170901

August’s PMI reading signalled a further improvement in operating conditions among US manufacturing firms. The upturn was partly driven by an increase in new orders. In line with rising client demand, workforce numbers grew at the fastest pace in six months. However, production levels increased at the weakest rate since June 2016. As a result, the level of outstanding business rose for the first time since April. Inflationary pressures intensified, with input prices and output charges both rising at faster rates. Business confidence remained robust, but softened slightly since July.

The seasonally adjusted IHS Markit final US Manufacturing Purchasing Managers’ Index™ (PMI™) registered 52.8 in August, down slightly from July’s reading of 53.3. Nonetheless, the latest index figure signalled an ongoing improvement in operating conditions across the US manufacturing sector.

Weighing on the headline index was a softer rise in manufacturing production. Output at manufacturing firms increased at the weakest pace since June 2016 in August. Some panellists noted that relatively subdued foreign client demand had limited growth in production.

Meanwhile, new orders rose at a pace only slightly weaker than July. Anecdotal evidence linked the rise in new business to improving domestic economic conditions and an associated rise in customer demand. In contrast, new export sales were broadly unchanged in August, following a fractional contraction in July.

For the first time since April, the level of outstanding business at manufacturing firms increased. Backlogs rose at a modest rate and panellists generally linked growth to greater volumes of new orders. Subsequently, firms continued to hire additional staff. Workforce numbers expanded at the strongest pace in six months.

On the price front, cost burdens increased at the fastest rate since April and output price inflation was the strongest in three months. Panellists noted that input cost inflation was driven by higher raw material prices, especially steel and electrical components. Firms generally passed these rises on to clients through increased factory gate charges.

In line with slower output growth, buying activity and inventories expanded at weaker rates. Nonetheless, a sustained increase in purchasing activity amid reports of stock shortages at vendors contributed to the greatest deterioration in vendor performance since March.

Positive sentiment remained robust in August, despite slipping slightly since July. Anecdotal evidence stated that optimism was influenced by improving market conditions and stronger client demand.

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

“Although still above the 50 ‘no change’ level, the decline in the PMI shows signs of a renewed stuttering of the manufacturing economy during August. The latest reading indicates one of the weakest improvements in the overall health of the sector seen over the past year, and translates into disappointing signals for comparable official data.
“The drop in the output index indicates that manufacturing could act as a drag on the economy in the third quarter, with exports dampening order book growth.
“The survey brings more encouraging signs of improved domestic demand, however, with orders for both consumer goods and investment goods such as plant and machinery on the rise, boding well for the wider economy to continue to expand as we move through the second half of 2017.”

IHS Markit, “Manufacturing PMI. Aug 2017“, 1 Sep 2017 (09:45) More

flag_usa US: ISM Manufacturing PMI. Aug 2017

Press Release Extract [ser_ism]

The August PMI® registered 58.8 percent, an increase of 2.5 percentage points from the July reading of 56.3 percent.
The New Orders Index registered 60.3 percent, a decrease of 0.1 percentage point from the July reading of 60.4 percent.
The Production Index registered 61 percent, a 0.4 percentage point increase compared to the July reading of 60.6 percent.
The Employment Index registered 59.9 percent, an increase of 4.7 percentage points from the July reading of 55.2 percent.
The Supplier Deliveries Index registered 57.1 percent, a 1.7 percentage point increase from the July reading of 55.4 percent.
The Inventories Index registered 55.5 percent, an increase of 5.5 percentage points from the July reading of 50 percent.
The Prices Index registered 62 percent in August, the same reading as July, indicating higher raw materials’ prices for the 18th consecutive month.

Comments from the panel reflect expanding business conditions, with new orders, production, employment, backlog and exports all growing in August, as well as supplier deliveries slowing (improving) and inventories increasing during the period. The Customers’ Inventories Index experienced a sharp decline in August compared to July.

Of the 18 manufacturing industries, 14 reported growth in August, in the following order: Textile Mills; Petroleum & Coal Products; Machinery; Transportation Equipment; Fabricated Metal Products; Computer & Electronic Products; Paper Products; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; Chemical Products; Nonmetallic Mineral Products; Plastics & Rubber Products; Printing & Related Support Activities; and Food, Beverage & Tobacco Products. Three industries reported contraction in August compared to July: Apparel, Leather & Allied Products; Primary Metals; and Furniture & Related Products.

Institute for Supply Management, “ISM Manufacturing PMI. Aug 2017“, 1 Sep 2017 (10:00) More

flag_usa US: Construction Spending. Jul 2017

Press Release Extract [ser_const]

Total Construction

Construction spending during July 2017 was estimated at a seasonally adjusted annual rate of $1,211.5 billion, 0.6 percent (±1.5 percent) below the revised June estimate of $1,219.2 billion. The July figure is 1.8 percent (±1.8 percent) above the July 2016 estimate of $1,189.8 billion. During the first 7 months of this year, construction spending amounted to $691.2 billion, 4.7 percent (±1.3 percent) above the $659.9 billion for the same period in 2016.

Private Construction

Spending on private construction was at a seasonally adjusted annual rate of $945.5 billion, 0.4 percent (±1.0 percent) below the revised June estimate of $949.4 billion.
Residential construction was at a seasonally adjusted annual rate of $517.5 billion in July, 0.8 percent (±1.3 percent) above the revised June estimate of $513.2 billion.
Nonresidential construction was at a seasonally adjusted annual rate of $428.0 billion in July, 1.9 percent (± 1.0 percent) below the revised June estimate of $436.2 billion.

Public Construction

In July, the estimated seasonally adjusted annual rate of public construction spending was $266.0 billion, 1.4 percent (±2.6 percent) below the revised June estimate of $269.8 billion. Educational construction was at a seasonally adjusted annual rate of $66.2 billion, 4.4 percent (±3.9 percent) below the revised June estimate of $69.2 billion. Highway construction was at a seasonally adjusted annual rate of $84.8 billion, 0.1 percent (±6.9 percent) above the revised June estimate of $84.7 billion.

US Census Bureau, “Construction Spending (Construction Put in Place) Jul 2017“, 1 Sep 2017 (10:00) More

flag_usa US: UOM Consumer Confidence Index (Final). Aug 2017

Press Release Extract [ser_11]
Index Aug 17 Jul 17 Aug 16 M-M% Y-Y%
Index of Consumer Sentiment 96.8 93.4 89.8 +3.6% +7.8%
Current Economic Conditions 110.9 113.4 107.0 -2.2% +3.6%
Index of Consumer Expectations 87.7 80.5 78.7 +8.9% +11.4%

Consumer confidence has remained at a very favorable level, although slipping somewhat from mid-month. The Sentiment Index has been higher during the first eight months of 2017 than in any year since 2000, which was the peak year of the longest expansion in U.S. history. The renewed strength in 2017 was mainly due to consumers’ favorable assessments of their own financial situations. Lows in unemployment, inflation, and interest rates, as well as renewed gains in the value of their homes and stock portfolios, pushed personal financial evaluations to near all-time peaks. When asked about news of recent developments, surprisingly few consumers made any reference to Charlottesville, North Korea, or Harvey-although too few interviews were conducted to fully assess the storm’s ultimate impact. Harvey may diminish the 3rd quarter pace of economic growth, and higher gas prices will directly impact consumers. Prior to the storm, consumers anticipated no increase in gas prices in the year ahead (an expected change of just +0.4 cents). Given the current resilience of consumers, temporary increases in gas prices as well as a brief period of weakness in economic growth and employment are unlikely to derail confidence. Nonetheless, all of these events are more likely to increase precautionary motives and to slightly temper spending trends.

University of Michigan, “UOM Consumer Confidence Index (Final). Aug 2017“, 1 Sep 2017 (10:00) More

Global: JP Morgan Manufacturing PMI. Aug 2017 (Final)

Press Release Extract [ser_67]

August saw a further acceleration in the rate of expansion of the global manufacturing sector. The J.P.Morgan Global Manufacturing PMI™ rose to a 75-month high of 53.1, up from 52.7 in July, and has now remained above the neutral 50.0 mark throughout the past one-and-a-half years.

global_pmi_20170901

Growth was evenly distributed across the consumer, intermediate and investment goods sectors during August, with similar PMI readings registered for each of these categories. Moreover, rates of improvement picked up in all three cases.

Developed nations outperformed (on average) emerging markets again in August. The euro area Manufacturing PMI matched June’s six-year record, while growth in the UK was among the best seen since mid-2014. Expansions were also registered in the US, Japan and Canada.

Growth across the emerging markets also accelerated during August. PMI readings hit six- and four-month highs in China and Taiwan respectively, and moved back into expansion territory in both Brazil and India. Growth slowed slightly in Russia, whereas contractions were seen in Thailand and Myanmar.

Global manufacturing production rose at the fastest pace in four months, underpinned by the steepest upturn in new work since March. International trade flows also strengthened, as new export business rose at the fastest pace in almost six-and-a-half years.

The upswing in new order intakes exerted pressure on capacity, leading to rising backlogs of work and improved jobs growth. Employment increased at the quickest pace since June 2011, as staffing levels rose in almost all of the nations covered by the August survey. Notable exceptions were job losses in China, Russia, Brazil and Thailand.

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

“The upturn in the global manufacturing sector is gathering pace in the third quarter, with August seeing the Manufacturing PMI rise to its highest level in over six years. Rates of expansion in output and new orders also accelerated, underpinning a further solid bounce in job creation. Although price pressures and supply-side constraints are rising, the sector should have sufficient momentum to sustain its current robust expansion.”

J.P.Morgan and IHS Markit in association with ISM and IFPSM, “Global Manufacturing PMI. Aug 2017 (Final)“, 1 Sep 2017 More

flag_japan Japan update

Nikkei Japan Manufacturing PMI. Aug 2017

Press Release Extract [ser_68]

Key points:

  • Output and new orders continue to increase
  • Domestic and international demand reported to have strengthened
  • Job creation maintained at solid rate

jp_pmi_20170901

The Japanese manufacturing sector continued to experience improving operating conditions during August, with output, new orders and employment all registering expansion. Strengthened demand from both domestic and international sources (especially China) was widely reported by panellists.

Price data showed that inflationary pressures continued to dissipate, with input costs rising to the slowest degree of 2017 so far. Output charges were increased only slightly as a result.

The headline Japan Manufacturing Purchasing Managers’ Index™ (PMI)® – a composite single- figure indicator of manufacturing performance – was little changed during August at a level of 52.2 (July: 52.1). The latest reading was indicative of solid growth, and the PMI has now recorded above the 50.0 no-change mark for 12 successive months.

Underpinning the ongoing expansion of the sector was a further increase in manufacturing output, the thirteenth in as many months. The rate of expansion was solid, and the best recorded since May. Panellists reported that a combination of backlog depletion – latest data showed a second successive monthly fall in outstanding business – and rising levels of new work supported production.

Overall new work increased during August for an eleventh successive month amid reports of higher domestic and international demand. New export orders rose modestly with manufacturers noting higher sales to clients based in China.

Stronger growth in production also enabled firms to bolster warehouse inventories over the month. August’s survey indicated that stocks of finished goods rose marginally following a slight decline in the previous month.

Panellists reported that positive projections for orders underpinned inventory accumulation, which was also noted as a reason to expand workforce numbers. Rising current workloads strengthened the need for additional workers and overall employment rose at a historically marked pace as a result.

Purchasing activity was also increased during August as companies bought inputs to service higher production requirements. However, there were reports of an imbalance between the supply and demand of inputs, especially metals and electronics. The net effect was a lengthening of delivery times for a sixteenth successive month. Input prices were also higher, although the rate of inflation was the lowest recorded in 2017 so far. Output charges were increased only fractionally as a result.

Finally, business confidence remained inside positive territory during August. Nearly 27% of the survey panel are forecasting growth in production, with the Olympics in 2020 and hopes of an ongoing improvement in the economic environment reported as factors supporting positive sentiment. That said, confidence weakened to the lowest recorded by the survey since March.

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

“August’s survey showed growth moving broadly sideways, maintaining the recent positive trend of improvement in the health of the manufacturing sector.

“The latest expansion was also balanced in terms of demand sources, with sales to both domestic and international clients (especially in China) reported to be up.

“With workforce numbers continuing to expand and companies projecting further rises in new orders, near-term prospects for ongoing manufacturing sector growth remain clearly positive.”

IHS Markit, “Nikkei Japan Manufacturing PMI. Aug 2017“, 1 Sep 2017 More

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flag_china China update

Caixin China General Manufacturing PMI. Aug 2017

Press Release Extract [ser_65]

Key Points:

  • Stronger rise in total new work supported by quickest increase in export sales since early 2010
  • Production levels continue to expand
  • Inflationary pressures intensify

cn_pmi_20170901

China’s manufacturing sector remained in expansion territory in August, fuelled by the strongest increase in new business for just over three years. Firmer foreign demand was a key driver of new order growth, with export sales rising to the greatest extent in over seven years in August. As a result, companies expanded their production schedules and buying activity, while business confidence rose to its highest for five months. However, stricter environmental policies were a key factor leading to longer delivery times, whilst inflationary pressures intensified as input costs and output charges both rose at faster rates.

The seasonally adjusted Purchasing Managers’ Index™ (PMI™) – a composite indicator designed to provide a single-figure snapshot of operating conditions in the manufacturing economy – registered 51.6 in August, up from 51.1 in July to signal an improvement in overall operating conditions. The health of China’s manufacturing sector has now strengthened in each of the past three months, with the latest upturn the strongest since February.

August survey data signalled a solid rise in total new work placed at Chinese manufacturers, with the rate of expansion the quickest seen for 37 months. A broad-based upturn in foreign demand was cited by panellists as a key driver of new order growth. This was highlighted by the sharpest increase in export sales since March 2010.

Sustained growth in new orders led firms to expand their production schedules again in August. Furthermore, the rate of growth was little- changed from July’s five-month high.

Staff numbers continued on a downward trend in August, though the rate of job shedding softened since July. According to panellists, lower payroll numbers were due to efforts to raise efficiency, as well as the non-replacement of staff that left voluntarily. Nonetheless, a combination of lower employment and rising new work led to a further increase in outstanding business in August. Notably, the pace of accumulation was the quickest seen in the year to date.

Rising output requirements underpinned a further increase in buying activity during August. Notably the rate of increase was the fastest seen for just over three years. Greater purchasing activity contributed to a further rise in stocks of inputs, albeit only marginal. In contrast, inventories of finished items declined at the quickest rate since May 2016, which some panellists attributed to the fulfilment of new orders.

The average time taken for inputs to be delivered continued to lengthen in August. Moreover, the rate at which vendor performance deteriorated was the most marked since January, with a number of firms mentioning that stricter environmental policies had delayed lead times.

Average input costs rose to the greatest extent in five months in August. Survey respondents widely commented on higher prices for a broad range of raw materials in the latest survey period. Consequently, output prices rose at a solid pace that was the fastest in 2017 to date.

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

“The Caixin China General Manufacturing PMI rose 0.5 points to 51.6 in August, the second-highest reading of this year so far. It was also the third consecutive month that the index had posted inexpansionary territory. Among the sub-indices: the output index dropped slightly but new orders continued growing. Both input costs and output prices rose further, with the latter hitting an eight month high. Inventories of finished goods dropped further and at a faster pace, but stockpiles of procured goods continued expanding in August. Overall operating conditions of the manufacturing sector

IHS Markit, “Caixin China General Manufacturing PMI. Aug 2017“, 1 Sep 2017 More

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