Mon 2 Oct 2017

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  • Today at the stock market Opinion
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  • Today at the stock market

    bull/bearU.S. stocks started the fourth quarter on a strong note on Monday, with the S&P 500, the Dow, NASDAQ and the Russell 2000 all hitting record high closes as data pointed to underlying strength in the economy.

    • The S&P 500 rose 9.84 points, or 0.39%, to 2,529.20.
    • The Dow Jones Industrial Average rose 154.02 points, or 0.69%, to 22,559.11.
    • The Nasdaq Composite rose 20.76 points, or 0.32%, to 6,516.72.
    • Advancing issues outnumbered declining ones on the NYSE by a 1.82-to-1 ratio; on Nasdaq, a 2.36-to-1 ratio favored advancers.
    • About 6.3 billion shares changed hands on U.S. exchanges, about even with the daily average for the past 20 trading days, according to Thomson Reuters data.

    A measure of U.S. manufacturing activity surged to a near 13½-year high in September. Disruptions to the supply chains caused by Hurricanes Harvey and Irma resulted in factories taking longer to deliver goods and boosted raw material prices.

    Among the sectors with the biggest gains on Monday were materials, industrials and financials.

    Optimism about tax reform also continued to bolster stocks. President Donald Trump last week proposed the biggest tax overhaul in three decades, but offered scant details.

    The small-cap Russell 2000 posted another record high close. Small-cap companies are expected to be among the biggest beneficiaries of a tax cut.

    “There are a lot of details (on tax reform) that need to be worked out, but the market is certainly willing to believe that something good might happen,” said Scott Wren, senior global equity strategist at Wells Fargo Investment Institute in St. Louis.

    Economic data has also helped, he said. “The services number is a better indicator of what’s driving the economy, but it’s nice to see the manufacturing number pick up.”

    Details were still emerging on the deadliest mass shooting in U.S. history. A gunman killed at least 58 people and wounded more than 500 more in Las Vegas on Sunday. Shares of gun makers rose, including Sturm Ruger (RGR.N), up 3.5%.

    General Motors was up 4.4% and hit an intraday record high after brokerage Deutsche Bank said the carmaker could launch driverless cars on a large scale in 2020.Bloomberg

    Market indices

    :-) The three market indices reported here closed on record highs today.

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

    Index Ticker Today Change 31 Dec 16 YTD
    S&P 500 SPX (INX) 2,529.12 +0.38% 2,238.83 +12.96%
    DJIA INDU 22,557.60 +0.68% 19,762.60 +14.14%
    NASDAQ IXIC 6,516.72 +0.31% 5,383.12 +21.05%

    Portfolio Indices

    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 2.769 -0.25% 2.105 +31.58%
    Valuation Rate USD/AUD 0.78775 -0.20% 0.72663 +8.41%
    AUD-denominated Index AUD 3.518 -0.06% 2.895 +21.52%

    Portfolio stock prices

    :-) Ebay closed on a record high of $38.73, beating its 19 Sep 2017 record of $38.59.

    Stock Ticker Today Change 31 Dec 16 YTD
    Alphabet A GOOGL $967.47 -0.64% $792.45 +22.08%
    Alphabet C GOOG $953.27 -0.61% $771.82 +23.50%
    Apple AAPL $153.81 -0.20% $115.82 +32.80%
    Amazon AMZN $959.19 -0.22% $749.87 +27.91%
    Ebay EBAY $38.73 +0.70% $29.69 +30.44%
    Facebook FB $169.47 -0.82% $115.05 +47.30%
    PayPal PYPL $64.18 +0.23% $39.47 +62.60%
    Twitter TWTR $17.09 +1.30% $16.30 +4.84%
    Visa V $105.44 +0.19% $78.02 +35.14%
    VMware VMW $110.15 +0.88% $78.73 +39.90%



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

    The Bloomberg Dollar Spot Index (DXY) rose 0.5%, headed to highest since Jul 2017.
    The EUR fell 0.7% to USD 1.1737, near a 6-week low.
    Britain’s GBP fell 0.9% to USD 1.3276, earlier falling the most since the Jun 2017.


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

    Oil and Gas Futures

    Futures prices

    Oil fell more than $1 a barrel on Monday as a rise in U.S. drilling and higher OPEC output put the brakes on a rally that helped prices notch their biggest third-quarter gain in 13 years.

    Iraq announced its exports rose slightly in September while a Reuters survey showed OPEC overall boosted output. [OPEC/M]

    U.S. drillers added six oil rigs in the week to Sept. 29, bringing the total count to 750, data from General Electric Co’s Baker Hughes energy services firm showed on Friday.

    “We’ve seen them add rigs for the first time in seven weeks, so that changes sentiment as well,” said John Tjornehoj, energy market analyst at CHS Hedging.

    Brent crude, the global benchmark, settled down 67 cents or 1.2 percent to $56.12 a barrel. It had notched a third-quarter gain of about 20 percent, the biggest increase for that quarter since 2004, and traded as high as $59.49 last week.

    U.S. crude closed down $1.09 or 2.1 percent to $50.58. The U.S. benchmark posted its strongest quarterly gain since the second quarter of 2016.

    Oil prices climbed last week on tension in Iraqi Kurdistan after the region’s independence vote.

    “The big short-term risk is obviously the pipeline. So far Turkey hasn’t closed the Kurdish pipeline,” said James Williams, president of energy consultant WTRG Economics.

    The rally had also been driven by signs that a three-year crude glut is easing, helped by a production cut deal among global producers led by the Organization of the Petroleum Exporting Countries.

    But a Reuters survey on Friday found OPEC oil output rose last month, mostly because of higher production in Iraq and also Libya, an OPEC member exempt from cutting output.

    However, Libya’s National Oil Company in a letter on Monday declared force majeure on deliveries from Sharara, the country’s largest oilfield.

    Middle Eastern oil producers are concerned the price rise will stir U.S. shale producers into more drilling and push prices lower again. Key OPEC producers consider a price above $60 as encouraging too much shale output.​

    Hedge funds have accumulated a record bullish position in middle distillates such as diesel, heating oil and gasoil, anticipating stocks will be relatively tight this winter.

    “We’ve seen a run up in heating oil futures, and I think that particular product has supported the rise of WTI. As we reverse here lower we see the recent strong correlation continuing,” said Tjornehoj, while noting that distillate prices fell on Monday.Reuters

    Prices are as at 15:48 ET

    • NYMEX West Texas Intermediate (WTI): $50.53/barrel -2.21% Chart
    • ICE (London) Brent North Sea Crude: $56.08/barrel -1.25% Chart
    • NYMEX Natural gas futures: $2.93/MMBTU -2.66% Chart

    flag_usa US: Las Vegas Mass Shooting: 58+ Killed

    A 64-year-old man armed with more than 10 rifles rained down gunfire on a Las Vegas country music festival on Sunday, slaughtering at least 58 people in the largest mass shooting in U.S. history before killing himself.

    The barrage from a 32nd-floor window in the Mandalay Bay hotel into a crowd of 22,000 people lasted several minutes, causing panic. Some fleeing fans trampled each other as police scrambled to find the gunman. More than 500 people were injured.

    On Monday, police identified the gunman as Stephen Paddock, who lived in a retirement community in Mesquite, Nevada, and said they did not know why he attacked the concert goers. The Islamic State militant group claimed responsibility for the massacre, but U.S. officials said there was no evidence of that.

    The preliminary death toll, which officials said could rise, eclipsed last year’s massacre of 49 people at an Orlando night club by a gunman who pledged allegiance to Islamic State militants.

    Shocked concert goers, some with blood on their clothing, wandered streets, where the flashing lights of the city’s gaudy casinos blended with those of emergency vehicles.

    Police said they had no information about Paddock’s motive, that he had no criminal record and was not believed to be connected to any militant group. Paddock killed himself before police entered the hotel room he was firing from, Clark County Sheriff Joseph Lombardo told reporters.Reuters

    flag_australia AU: Australian Industry Group Manufacturing PMI. Sep 2017

    Press Release Extract [ser_au_aig_pmi]

    Key Findings

    • The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI®) fell 5.6 points in September to 54.2 points (seasonally adjusted), indicating a deceleration in growth after August’s spike to a recent high of 59.8 points. Results above 50 points indicate expansion with higher results indicating a stronger expansion.
    • September marked a twelfth consecutive month of expansion for the Australian PMI® and the longest run of expansion since 2007 in the seasonally adjusted series. In trend terms, growth is continuing but looks to have decelerated through the September quarter.
    • The Australian PMI® is currently leading the ABS manufacturing output data by about three months. The latest ABS estimate of manufacturing output volumes indicated growth of 1.8% q/q in the June quarter of 2017, the strongest quarter of growth since June 2011. The latest results from the Australian PMI® indicate another quarter of growth in ABS output volumes is likely in September 2017, but probably at a slower pace than in June.
    • All seven activity sub-indexes in the Australian PMI® expanded or were stable in September (seasonally adjusted). Exports recovered (rising to 51.2 points) after a mild contraction in August (49.3 points). All others expanded but at slower rate than in August.
    • All eight sub-sectors in the Australian PMI® expanded in September (trend). Non-metallic mineral products (75.5 points) hit a new record high, reflecting the strength of demand for building-related products. Other large sub-sectors grew at a decelerating pace this month.
    • Positive sources of local demand for manufacturers in September included apartment and infrastructure construction; mining and agricultural equipment; renewables and utilities. A longer colder winter reportedly contributed to increased demand for heating equipment. Respondents also reported a rare spike in exports of construction-related products for emergency relief and reconstruction in the US following recent hurricane damage. Last orders are now under way for suppliers of components to Australian automotive assembly.

    Activity Sub-Indices

    • The production sub-index fell by 4.5 points to 56.9 points in September, coming down from last month’s spike and indicating a slower pace of growth (seasonally adjusted). The production sub-index has indicated expansion in every month so far this year.
    • The new orders sub-index dropped 8.4 points to 55.9 points in September, almost where it was in July. Ongoing (but slower) growth in new orders suggests further growth for parts of manufacturing through the rest of 2017.
    • The sales sub-index ticked up to 51.4 points from to 50.9 points in August, indicating modest growth in sales this month, after a stable month in August.
    • The exports sub-index fell by 1.9 points to 51.2 points in September, indicating a quick recovery from last month’s mild fall. This probably reflects movements in the AUD.
    • The employment sub-index fell by a further 4.0 points to 52.4 points in September, indicating a slower rate of expansion. This is consistent with recent ABS estimates that show manufacturing employee numbers declining in the three months to August but more hours being worked across the industry (that is, fewer people were working more hours).
    • The deliveries sub-index fell by 2.4 points to 50.5 points in September, signalling stability.
    • The stocks sub-index (inventories) fell by 7.2 points to 51.7 points, indicating a very modest increase in inventories, after spiking much higher in August.
    • Capacity utilisation rose to 77.6% of available capacity, its highest since May.

    Wages and Prices Sub-Indices

    • The input prices sub-index rose to 65.8 points in September, close to its average over the past 12 months (65.6 points). Input price rises are continuing to cause problems for manufacturers, with margins being eroded by spiralling energy costs and rising raw materials prices for some key commodities.
    • The wages sub-index rose by a further 2.2 points to 61.2 points in September. This is above the average over the past twelve months (58.9 points) for this sub-index.
    • The manufacturing selling price sub-index fell by 4.4 points to 49.3 points in September, indicating stable pricing after some sporadic price rises in previous months of 2017, as selling prices lifted to match rising input costs and rising demand. Any gains in selling prices have remained relatively subdued however, so the pressure on manufacturers’ margins continues. Mounting energy costs are further squeezing their profitability.

    Australian Industry Group, “Australian Manufacturing Index“, 2 Oct 2017 More

    flag_australia AU: Commonwealth Bank Manufacturing PMI

    Press Release Extract [ser_au_pmi]

    Key findings

    The Australian manufacturing sector expanded at a stronger rate at the end of the third quarter, despite slower rises in output and new orders. Instead, the improvement in growth was driven by markedly lengthening suppliers’ delivery times, plus a quicker increase in inventories. Business confidence remained positive, despite easing to a one-year low, while employment rose modestly.

    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 – edged up in September to 53.8. That was an improvement on August’s 12-month low of 53.5, but still below the average for the survey which began in May 2016. PMI readings above 50.0 signal growth, while those below 50.0 indicate contraction.

    September’s survey indicated the continued expansion of manufacturing output and new orders. However, rates of growth were softer, easing to the lowest recorded by the survey for 13 and 15 months respectively.

    Panellists indicated that economic conditions remained positive, with demand rising both at home and abroad. New export orders rose modestly, following August’s marginal fall, with Asia-Pacific reported to be the primary source of expansion.

    There were reports from a number of rms that competitive pressures had restricted growth which was also noted as a reason for limited pricing power. Latest data showed prices charged rising at the weakest rate in ten months in spite of a sharper increase in input prices.

    Unfavourable exchange rate factors and suppliers raising their prices in general were indicated as in ationary drivers. Vendors were reported to be under considerable pressure, amid evidence of stock shortages at a time of strong demand. Lead times lengthened to the greatest extent since the start of the year.

    Capacity pressures were also evident at manufacturers, with backlogs rising to the strongest degree in three months. Employment continued to increase in response, although the rate of expansion was modest and unchanged on August’s one-year low.

    Finally, business confidence remained high despite weakening to a one-year low. Positive demand conditions are expected to be sustained over the next 12 months.

    Commenting on the Commonwealth Bank Manufacturing PMI data, Michael Blythe, Chief Economist at the Commonwealth Bank, said:
    “The PMI stabilised in September after declines in July and August. Manufacturing activity is still expanding but it appears that the period of acceleration is over. Nevertheless, panellists report that economic conditions remain favourable and this positive view extends to expectations for the next year. Some of the themes evident for a while now were again on show in September. Capacity pressures continue to lift with backlogs of work and supplier delivery times lifting again. And competitive pressures mean that output prices are lagging well behind growth in input costs.”

    Commonwealth Bank of Australia, “Australian Manufacturing PMI“, 2 Oct 2017 More

    flag_australia AU: CoreLogic House Price Indices. Sep 2017. Sep 2017

    Press Release Extract [ser_au_corelogic]

    The September results confirmed that dwelling values edged 0.2% higher across Australia over the month, led by a 0.3% rise in capital city values and a 0.1% gain across the combined regional markets. The latest figures take national dwelling values 0.5% higher over the September quarter, which is the slowest rate of quarter-on-quarter growth since June 2016, and national values are up 8.0% over the past twelve months.

    Month Quarter Annual Total Median
    Sydney -0.1% +0.2% +10.5% +14.0% $909,613
    Melbourne +0.9% +2.0% +12.1% +15.4% $703,816
    Brisbane +0.3% +0.5% +2.9% +7.3% $490,208
    Adelaide +0.0% +0.3% +5.0% +9.5% $429,583
    Perth +0.1% -1.3% -2.9% +1.0% $462,783
    Hobart +1.7% +3.4% +14.3% +20.2% $391,618
    Darwin -0.7% -4.0% -4.7% +0.6% $445,516
    Canberra +0.6% +1.3% +7.8% +12.6% $580,043
    Combined capitals +0.3% +0.7% +8.5% +12.3% $648,845
    Combined regional +0.1% +0.0% +5.6% +11.2% $350,471
    National +0.2% +0.5% +8.0% +12.1% $540,647

    According to analysis by CoreLogic head of research Tim Lawless, the combined capital city trend growth rate is clearly losing steam with dwelling values rising by 0.7% over the September quarter and well down from the recent peak rate of quarter-on-quarter growth which was recorded at 3.5% over the December 2016 quarter. Mr Lawless said, “This slowing in the combined capitals growth trend is heavily influenced by conditions across the Sydney market where capital gains have stalled.”

    The September quarter saw Sydney dwelling values edge 0.2% higher and values slipped 0.1% lower over the month. Sydney’s quarterly result was the slowest since values declined by 2.2% over the March quarter of 2016 and it’s the first month-on-month decline after 17 months of consistent capital gains.

    Interestingly, across the Sydney housing market, it was the detached housing sector that pulled the monthly and quarterly growth rates lower. While unit values are also appreciating at a slower rate, detached housing values were 0.3% lower over the month of September and 0.2% lower over the quarter while unit values recorded a subtle rise.

    For the Sydney housing market, concerns around unit oversupply is less evident compared with the Brisbane unit sector, or to a lesser extent with Melbourne. Mr Lawless said, “Potentially the affordability challenges facing Sydney buyers within the detached housing sector are pushing more demand towards the medium to high density sector, where, based on median values, houses are almost $290,000 more expensive than units.”

    Melbourne’s housing market is also showing slower growth conditions, however growth remains relatively resilient compared with Sydney. Dwelling values were almost 1% higher over the month of September and rose by 2.0% over the September quarter.

    Mr Lawless said, “The stronger housing market conditions in Melbourne are supported by auction clearance rates which have consistently remained above 70%. Additionally, advertised stock levels remain remarkably low and private treaty sales continue to sell rapidly, averaging 30 days on market.”

    Hobart further cemented its position as the best performing housing market after a recent history of sluggish growth conditions. The past twelve months has seen Hobart dwelling values surge 14.3% higher; the highest annual growth rate since 2004. Despite the strong capital gains, the cost of housing remains substantially lower than any other capital city with a typical house value of $412,340 and a median unit value of just under $320,000.

    CoreLogic, “ Sydney House Values Fall in September as Capital Gains Continue to Lose Steam “, 2 Oct 2017 More

    flag_europe EU: Eurozone Manufacturing PMI. Sep 2017

    Press Release Extract [ser_eu_pmi]

    Key findings:

    • Stronger output growth and capacity constraints drive job creation to survey-record high
    • Final Eurozone Manufacturing PMI at 58.1 in September (Flash: 58.2, August Final: 57.4)
    • Output and new orders expand across all nations covered


    Conditions in the euro area manufacturing sector strengthened to the greatest extent in over six-and-a- half years during September. At a 79-month high of 58.1, little-changed from the flash estimate of 58.2, the final IHS Markit Eurozone Manufacturing PMI® signalled expansion for the fifty-first month in a row. The average reading over the third quarter (57.4) was the highest since the opening quarter of 2011.

    The upturn remained broad-based by nation, with all eight of the surveys comprising the euro area average reporting growth. Germany moved back to the top of the rankings – its PMI hit a 77-month high – while the Netherlands PMI scored a 79-month record, in second position overall. Austria was again one of the strongest-performing nations, despite seeing growth ease to a four-month low.

    Mild accelerations saw the France PMI and Greece PMI reach their highest levels since April 2011 and June 2008 respectively. The rate of improvement was unchanged in Italy, picked up in Spain, but slowed in Ireland.

    Eurozone manufacturing production expanded at the fastest pace in almost six-and-a-half years in September, underpinned by a strong and accelerated increase in new work received. The rate of growth in new orders almost matched the 76- month record seen June.

    Improving domestic market conditions combined with increased levels of new export business were the main factors supporting the latest increase in new work. Although September saw the rate of expansion in new export orders moderate, it remained among the strongest witnessed over the past six-and-a-half Years. Faster increases were registered in the Netherlands and Spain, while slower but still strong growth was seen in Germany, France, Italy and Ireland. Greece saw a mild contraction. Although the rate of new export order growth slowed in Germany, it remained sharp and was only exceeded by that seen in the Netherlands.

    Stronger growth of output and new orders tested capacity at eurozone manufacturers, leading to the steepest increase in backlogs of work for over 11 years. This in turn encouraged further job creation, with employment rising to the greatest extent since the eurozone series began in June 1997.

    Similar to the trend in production volumes, the sharpest increases in staffing levels were seen in the Netherlands (79-month record), Germany (steepest gain in 76 months) and Austria (four-month low). Accelerations were seen in France, Italy and Spain, whereas rates of increase slowed in Ireland and Greece.

    Capacity constraints were also felt at suppliers, as signalled by the sharpest lengthening in vendor delivery times since April 2011. Higher demand for raw materials and associated shortages were the main factors underlying increased lead times.

    This also fed through to higher input costs, with purchase price inflation picking up to a five-month high. All of the nations covered by the survey recorded steeper increases in input costs. Average selling prices rose for the twelfth month running and also at the fastest pace since April.

    The outlook for the eurozone manufacturing sector remained positive in September. The overall degree of optimism improved to its second-highest since the series began in July 2012, beaten only by June’s record. Companies expect improving economic conditions and rising demand to support further output growth over the coming 12 months.

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

    ‘The eurozone manufacturing boom kicked into an even higher gear in September, with the PMI rising to a level surpassed only once in the past 17 years. The recovery is also looking increasingly broad- based, with rising demand across the region lifting all boats. Greece is the latest good news story, enjoying its strongest growth since June 2008.

    ‘Surging order book growth has encouraged manufacturers to take on extra staff at a rate never previously seen in the 20-year history of the PMI survey. Despite this expansion of capacity, backlogs of incomplete work built up at a faster rate, suggesting that the hiring upturn has plenty more room to run.

    ‘Optimism about the outlook has also improved, highlighting the increasingly positive mood among euro area producers. The stronger euro has so far barely dented export* growth and domestic demand conditions were generally seen to have improved.

    ‘With the upturn being accompanied by rising inflationary pressures, expectations of an imminent announcement from the ECB in relation to tapering of policy stimulus will intensify.’

    IHS Markit, “Eurozone Manufacturing PMI. Sep 2017“, 2 Oct 2017 More

    flag_usa US: Construction Spending (Construction Put in Place). Aug 2017

    Press Release Extract [ser_us-construction]

    Total Construction

    Construction spending during August 2017 was estimated at a seasonally adjusted annual rate of $1,218.3 billion, 0.5 percent (±1.3 percent) above the revised July estimate of $1,212.3 billion. The August figure is 2.5 percent (±1.8 percent) above the August 2016 estimate of $1,189.1 billion. During the first 8 months of this year, construction spending amounted to $806.2 billion, 4.7 percent (±1.3 percent) above the $769.9 billion for the same period in 2016.


    Private Construction

    Spending on private construction was at a seasonally adjusted annual rate of $954.8 billion, 0.4 percent (±1.2 percent) above the revised July estimate of $950.5 billion. Residential construction was at a seasonally adjusted annual rate of $520.9 billion in August, 0.4 percent (±1.3 percent) above the revised July estimate of $518.6 billion. Nonresidential construction was at a seasonally adjusted annual rate of $433.9 billion in August, 0.5 percent (± 1.2 percent) above the revised July estimate of $432.0 billion.

    Public Construction

    In August, the estimated seasonally adjusted annual rate of public construction spending was $263.5 billion, 0.7 percent (±2.3 percent) above the revised July estimate of $261.7 billion. Educational construction was at a seasonally adjusted annual rate of $67.3 billion, 3.5 percent (±3.9 percent) above the revised July estimate of $65.0 billion. Highway construction was at a seasonally adjusted annual rate of $81.9 billion, 1.3 percent (±5.1 percent) below the revised July estimate of $83.0 billion.

    US Census Bureau, “Construction Spending (Construction Put in Place). Aug 2017“, 2 Oct 2017 (10:00) More

    flag_usa US: IHS Markit Manufacturing PMI. Sep 2017

    Press Release Extract [ser_us_pmi]

    Key findings:

    • Production rises modestly but new order growth softens
    • Input prices increase at fastest pace since December 2012


    September survey data signalled a further improvement in operating conditions across the US manufacturing sector. The overall upturn was supported by further growth in output and new orders. Strong client demand was a key factor behind the fastest rise in staffing levels so far this year. Business confidence also remained strong, despite slipping since August. On the price front, cost pressures intensified, with input prices increasing at the quickest pace since December 2012. Output charges meanwhile rose at the steepest rate for five months.

    The seasonally adjusted IHS Markit final US Manufacturing Purchasing Managers’ IndexTM (PMITM) registered 53.1 in September, up slightly on the flash reading of 53.0 and rising from 52.8 in August. The upturn signalled a slight pick up in growth momentum and a strong improvement in overall operating conditions across the sector.

    Production growth continued to expand at the end of the third quarter, though the rate of growth was unchanged from August’s 14-month low. Nonetheless, a number of panellists suggested the rise in production was due to improved market conditions.

    New orders received continued to increase in September. Anecdotal evidence linked the rise to strong client demand and greater marketing activity. That said, the pace of expansion of new orders eased for the second month running. The overall upturn was supported by higher export sales, which rose marginally.

    Inflationary pressures intensified as input price inflation accelerated sharply. Moreover, the rate of increase was the fastest since December 2012. Panellists commented that raw material prices – notably for metals – were driven up after the recent hurricanes. Severe weather conditions also contributed to a further deterioration in vendor performance, with lead-times lengthening to the greatest extent since February 2015.

    Firms generally passed on greater cost burdens to clients through higher charges. Although the rate of output price inflation reached a five-month high, it was moderate overall.
    Backlogs of work continued to rise in September. The pace of accumulation was modest and broadly in line with that seen in August. To help ease capacity pressures, manufacturing firms increased staff numbers again. The rate of job creation was solid and the strongest in 2017 so far.

    In line with weaker new order growth, purchasing activity and stock of inputs both expanded at softer rates. Notably, pre-production inventories only grew fractionally.
    Optimism remained robust, despite falling to a four- month low. Manufacturers linked positive sentiment to improved market conditions and planned investment.

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

    ‘While the headline PMI remained resiliently elevated in September, despite disruption from hurricanes Harvey and Irma, the details of the survey are more worrying. Output growth was unchanged on August’s 14-month low, and translates into stagnation at best in terms of the official manufacturing output data. Firms’ expectations of future output growth also slipped to a four-month low.

    ‘There was better news on the hiring front, with job creation perking up to a nine-month high. However, with employment rising faster than output, productivity may be slipping.

    ‘Although the hurricanes appear to have made little overall impact on production, supply delays were widely reported and prices for many inputs rose, suggesting some near-term upward pressure on inflation.’

    IHS Markit, “IHS Markit US Manufacturing PMI. Sep 2017“, 2 Oct 2017 (09:45) More

    flag_usa US: ISM Manufacturing PMI Sep 2017

    Press Release Extract [ser_us_ism_pmi]

    The September PMI® registered 60.8 percent, an increase of 2 percentage points from the August reading of 58.8 percent.
    The New Orders Index registered 64.6 percent, an increase of 4.3 percentage points from the August reading of 60.3 percent.
    The Production Index registered 62.2 percent, a 1.2 percentage point increase compared to the August reading of 61 percent.
    The Employment Index registered 60.3 percent, an increase of 0.4 percentage point from the August reading of 59.9 percent.
    The Supplier Deliveries Index registered 64.4 percent, a 7.3 percentage point increase from the August reading of 57.1 percent.
    The Inventories Index registered 52.5 percent, a decrease of 3 percentage points from the August reading of 55.5 percent.
    The Prices Index registered 71.5 percent in September, a 9.5 percentage point increase from the August level of 62, indicating higher raw materials prices for the 19th consecutive month.

    Comments from the panel reflect expanding business conditions, with new orders, production, employment, order backlogs and export orders all growing in September; as well as, supplier deliveries slowing (improving) and inventories growing at a slower rate during the period. The Customers’ Inventories Index remains at low levels.

    Of the 18 manufacturing industries, 17 reported growth in September, in the following order: Textile Mills; Machinery; Nonmetallic Mineral Products; Transportation Equipment; Plastics & Rubber Products; Paper Products; Wood Products; Computer & Electronic Products; Food, Beverage & Tobacco Products; Chemical Products; Fabricated Metal Products; Miscellaneous Manufacturing; Petroleum & Coal Products; Apparel, Leather & Allied Products; Printing & Related Support Activities; Electrical Equipment, Appliances & Components; and Primary Metals.

    One industry, Furniture & Related Products, reported contraction in September compared to August.

    Institute for Supply Management, “September 2017 Manufacturing ISM® Report On Business®“, 2 Oct 2017 (10:00) More

    flag_usa US: Estimates of Q3/2017 GDP

    Atlanta Federal Reserve: 2.7%

    The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2017 is 2.7 percent on October 2, up from 2.3 percent on September 29. The forecasts for third-quarter real consumer spending growth and third-quarter real private fixed investment growth increased from 1.8 percent and 0.3 percent, respectively, to 2.3 percent and 1.8 percent, respectively, after this morning’s construction spending release from the U.S. Census Bureau and this morning’s Manufacturing ISM Report On Business from the Institute for Supply Management (ISM). The model’s estimate of the dynamic factor for September—normalized to have mean 0 and standard deviation 1 and used to forecast the yet-to-be released monthly GDP source data—increased from 0.04 to 1.59 after the ISM report.


    Federal Reserve Bank of Atlanta, “GDPNow: Latest forecast: 2.7 percent — October 2, 2017More

    Morgan Stanley: 2.8%

    Morgan Stanley economists said on Monday they increased their growth estimate on U.S. gross domestic product in Q3/2017 to 2.8% from 2.6% based on the latest data on construction spending and factory activity. Earlier Monday, the government said construction spending grew 0.5% in Aug 2017 after 2 months of declines, while the Institute for Supply Management (ISM) said its index on manufacturing activity unexpectedly rose to its strongest level in more than 13 years in Sep 2017.Reuters

    Global: JPMorgan Global Manufacturing PMI. Sep 2017

    Press Release Extract [ser_global_pmi]

    The global manufacturing economy continued to expand at a solid and steady pace during September. The J.P.Morgan Global Manufacturing PMI™ – a composite index1 produced by J.P.Morgan and IHS Markit in association with ISM and IFPSM – posted 53.2, unchanged from August’s 75-month high.


    PMI readings for the worldwide consumer, intermediate and investment goods sectors signalled further expansion in September. Rates of improvement remained broadly similar across all three. Growth accelerated at intermediate goods producers, but slowed in the consumer and investment goods categories.

    National PMI indices signalled expansion in almost all of the nations covered by the survey. Among the largest industrial regions covered by the survey, growth accelerated in the eurozone (79-month high), the US and Japan (four-month high), but slowed slightly in China, the UK and Taiwan. The South Korea PMI moved back into expansion territory. The upturn in the euro area was again led by Germany, the Netherlands and Austria.

    Manufacturing production rose at the quickest pace in six months, underpinned by further increases in both total new orders and international trade volumes. The continued upturn in new order inflows exerted further pressure on capacity, leading to one of the steepest increases in backlogs of work over the past three-and-a- half years. This in turn encouraged manufacturers to raise employment to the greatest extent since May 2011.

    Staffing levels were increased in almost all of the nations covered by the survey. Notable exceptions were job losses in China, South Korea and Brazil. The rate of increase accelerated to a nine-month high in the US, series-record high in the euro area, but slowed to a ten- month low in Japan.

    Price pressures intensified in September. Input cost inflation rose sharply to a seven-month high, a key factor underlying the steepest increase in selling prices since May 2011. Companies linked higher purchasing costs to rising commodity prices and increased supply-chain pressures (reflected in a steep lengthening of average vendor lead times).

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

    ‘The global manufacturing sector continued to expand at a solid and stable clip in September, as output growth ticked higher and new orders continued to rise at one of the best rates over the past three years. The sector looks to have sufficient momentum to see growth continue through to year-end, even in the face of a recent revival in cost inflationary pressures.’

    J.P.Morgan and IHS Markit in association with ISM and IFPSM, “JPMorgan Global Manufacturing PMI. Sep 2017“, 2 Oct 2017 (11:00) More

    flag_japan Japan update

    Nikkei Japan Manufacturing PMI. Sep 2017

    Press Release Extract [ser_jp_pmi]

    Key points:

    • Production and new orders increase at accelerated rates
    • Employment growth weakest since November 2016
    • Cost pressures intensify


    Latest data indicated further improvements in the Japanese manufacturing sector. Output, order book volumes and foreign demand all increased solidly following modest expansions in August. Employment expanded for the thirteenth month in a row, albeit at the weakest pace since last November. Input price pressures continued to rise, although the rate of inflation facing producers was not met with equal hikes in charges to customers. Output prices picked up only marginally in September.

    The headline Japan Manufacturing Purchasing Managers’ Index™ (PMI)® – a composite single- figure indicator of manufacturing performance – was at a four-month high of 52.9 in September, rising from 52.2 in August and signalling a robust improvement in the health of the manufacturing sector.

    Stronger upturns in output and new orders supported the improved headline figure, with production and new order growth reaching four- month highs in September. Firms suggested that incoming new business was spurred on by demand for new products. There was similar evidence of strong demand from abroad, with new export orders rising to the greatest extent seen in seven months. Anecdotal evidence pointed to business influxes from the United States and Asian countries.

    Production growth and order inflows triggered Japanese manufacturing firms to boost purchasing activity, with close to one-in-five survey respondents reporting higher input acquisitions. September’s upturn was the strongest since May.

    Solid improvements in buying activity appeared to increase pressures on supply chains, as vendor delivery times worsened at the strongest rate since May 2011.

    Higher input buying fed through to a rise in stocks of purchases in September, following a decrease in the previous month. That said, the rate of accumulation was marginal.
    Manufacturing employment increased for the thirteenth successive month. However, payroll numbers grew at the weakest rate since November 2016. Weak employment growth coincided with growing levels of outstanding business. The rate of backlog accumulation was, however, only fractional as close to three-quarters of respondents signalled no change in work-in-hand.

    Price pressures showed no signs of easing in September. In fact, cost burdens edged up further, with the rate of inflation reaching a five-month high. Price hikes in metals and petroleum-related products were widely reported by panellists. However, only part of higher cost burdens were passed through to clients, as indicated by a marginal increase in output prices.

    Lastly, businesses remained upbeat towards growth prospects in September. A number of survey respondents indicated that Olympic Games- related demand and new customers could boost output over the next 12 months. Notably, the level of positive sentiment strengthened since August.

    Commenting on the Japanese Manufacturing PMI survey data, Joe Hayes, Economist at IHS Markit, which compiles the survey, said:

    ‘September data signalled further improvement to the Japanese manufacturing sector, led by strong increases in output and new orders. Stronger international client demand provided a key source of growth, as shown by export sales expanding at the quickest pace in seven months. At the same time, higher demand for inputs has hampered supplier performance, with delivery times deteriorating at the fastest rate since May 2011.

    ‘Employment growth weakened in comparison to prior months; however this follows modest pressure on capacity, as signalled by broadly stagnant levels of backlogs of work.

    ‘Data suggest hikes in raw material prices are driving up cost burdens, however this is yet to impact output prices which rose only slightly.’

    IHS Markit, “Nikkei Japan Manufacturing PMI. Sep 2017“, 2 Oct 2017 More

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    flag_china China update

    Caixin China General Manufacturing PMI. Sep 2017

    Key Points:

    • September data signals weaker increases in output and new orders.
    • Employment continues to decline, albeit marginally
    • Input prices and output charges both rise sharply


    Manufacturing operating conditions in China continued to improve at the end of the third quarter, albeit only marginally. Production and new orders both expanded at softer rates, with firms also signalling slower growth in export sales. As a result, purchasing activity increased at a weaker pace while staffing levels continued on a downward trend. Environmental inspection policies meanwhile weighed on supplier performance, with delivery times lengthening to the greatest extent since January. At the same time, inflationary pressures picked up, with average input costs and output prices both rising sharply.

    The seasonally adjusted Purchasing Managers’ Index™ (PMI™) – a composite indicator designed to provide a single-figure snapshot of operating conditions in the manufacturing economy – a composite indicator designed to provide a single-figure snapshot of operating conditions in the manufacturing economy – fell from 51.6 in August to 51.0 in September, but remained above the crucial no-change 50.0 mark for the fourth month in a row. That said, the index was consistent with only a marginal improvement in the health of China’s manufacturing sector.

    The decline in the headline index coincided with a weaker expansion in total new business during September. Furthermore, latest data pointed to the slowest increase in new orders for three months. While some panellists commented that improved market conditions had helped to lift sales, other firms mentioned that subdued client demand had weighed on growth. Notably, new export work increased only marginally during the latest survey period.

    In line with the trend for new orders, growth in output was the least marked since June and moderate overall.

    Purchasing activity also increased at a weaker pace at the end of the third quarter. Despite demand for inputs moderating slightly, the average time taken for purchased items to be delivered to manufacturers continued to lengthen in September. Moreover, vendor performance deteriorated at the quickest rate since the start of the year. A number of respondents linked longer lead times to environmental inspection policies and stock shortages.

    Chinese manufacturing employment declined again in September amid reports of company down-sizing policies. That said, the rate of job shedding weakened to a marginal pace. Lower staffing levels and a further upturn in new work placed further pressure on operating capacity, as shown by a sustained increase in backlogs of work. However, the rate of accumulation eased to its weakest for five months.

    On the inventories front, stocks of purchases declined for the first time since June, albeit at a modest pace. The amount of finished goods held by manufacturers also declined modestly during September.

    Latest data signalled a sharp and accelerated rise in average cost burdens. Furthermore, the rate of inflation was the steepest seen for nine months, with a number of panellists linking inflation to greater raw material costs. As a result, factory gate charges rose at a faster pace.

    Manufacturers remained optimistic that output would increase over the next year, though the degree of optimism weakened slightly since August.

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

    ‘The Caixin China General Manufacturing Purchasing Managers’ Index fell 0.6 points to 51.0 in September, still staying in expansionary territory. The sub-index for output indicated that
    production rose at a slightly slower pace than in the previous month as growth in new orders decelerated. The sub-indices for output prices and input costs increased further, both hitting their highest level seen this year. However, the sub-index measuring stocks of finished goods fell for the fourth straight month in September while stocks of purchases also contracted. The manufacturing sector continued to expand in September, although at a slightly weaker rate. The Chinese economy was stable in the third quarter. But the outstanding price pressure from upstream industries will be a drag on the continued improvement of companies’ profitability.’

    IHS Markit, “Caixin China General Manufacturing PMI™“, 30 Sep 2017 More

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