Wed 4 Oct 2017

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  • Today at the stock market

    bull/bearA gauge of global stocks and Wall Street rallied to fresh highs on Wednesday on encouraging growth worldwide, while the dollar fell even as data revealed an accelerating U.S. service sector that could lead to higher interest rates in Dec 2017.

    The Dow, S&P 500 and Nasdaq all set new closing highs for the third consecutive session, while MSCI’s index of stock performance in 47 countries also hit a new high:

    • The S&P 500 index gained 3.16 points, or 0.12%, to 2,537.74
    • The Dow Jones Industrial Average index rose 19.9 points, or 0.09%, to 22,661.57
    • The Nasdaq Composite index added 2.91 points, or 0.04%, to 6,534.63.

    U.S. Treasury debt yields rose on the Institute for Supply Management’s index of non-manufacturing activity, which rose in September at its fastest clip in 12 years.

    Oil prices were mixed on caution that rising U.S. crude output could scupper a crude rally that lasted for most of the third quarter. Brent settled down 20 cents at $55.80/barrel, while U.S. WTI fell 44 cents to settle at $49.98/barrel.

    The potential for U.S. tax reform has been driving the recent rally on Wall Street as geo-political tensions have ebbed and economic data remains strong, said Michael Arone, chief investment strategist at State Street Global Advisors in Boston. “If the earnings season comes in as expected, you continue to see progress made on tax reform and you see diminished concerns about the geopolitical situation, the market wants to move higher,” he said.

    MSCI’s all-country world stock index gained 0.10% while the pan-European FTSEurofirst 300 index of leading regional shares closed down 0.13% at 1,533.43.

    European shares fell as the impact of the crisis in Catalonia spread from Madrid and Spanish banks to the wider industry and euro zone region, particularly Italy.

    Spain’s IBEX posted its worst single-day loss in 15 months with a 2.85% decline. Spanish government borrowing costs rose to their highest since Mar 2017, stretching the gap over German benchmarks to the widest in over 5 months after Catalonia’s secessionist leader said the region will declare independence in “days.” Catalonia will move next week to declare independence from Spain, a regional government source said, as a violence-marred vote on Sunday threatens the country’s foundations and has unnerved financial markets. Spain’s 10-year bond yield rose as much as 7 basis points to 1.795 percent ES10YT=RR in early trades, according to Reuters data, the highest since mid-March.

    Data from major economies showed solid growth worldwide.

    In Europe, business across the euro zone grew rapidly in September as firms struggled to keep up with demand, a survey showed, with October looking likely to be lively as well.

    IHS Markit’s final composite Purchasing Managers’ Index for the euro zone bounced to 56.7 in Sep 2017 from 55.7 in Aug 2017, in line with an earlier flash estimate and comfortably above the 50-mark that separates growth from contraction.

    Japan’s services sector expanded in Sep 2017 at the slowest rate in 11 months as the pace of new orders eased, but a raft of other data suggest the economic recovery remains intact even as momentum may have ebbed slightly in the third quarter.

    U.S. private employers added 135,000 jobs in Sep 2017, topping economists’ expectations by 10,000, even as Hurricane Harvey and Irma “significantly impacted smaller retailers,” a report by a payrolls processor showed. The increase for the ADP National Employment Report was the smallest since Oct 2016. Aug 2017 private payroll gains were revised down to 228,000 from the original 237,000 increase.Reuters

    Market indices

    :-) The major market indices reported below closed on record highs.

    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) 2,537.74 +0.12% 2,238.83 +13.35%
    DJIA INDU 22,661.64 +0.08% 19,762.60 +14.66%
    NASDAQ IXIC 6,534.63 +0.04% 5,383.12 +21.39%

    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 2.766 -0.47% 2.105 +31.43%
    Valuation Rate USD/AUD 0.79116 +0.32% 0.72663 +8.88%
    AUD-denominated Index AUD 3.499 -0.78% 2.895 +20.87%

    Portfolio stock prices

    Stock Ticker Today Change 31 Dec 16 YTD
    Alphabet A GOOGL $966.78 -0.55% $792.45 +21.99%
    Alphabet C GOOG $951.68 -0.64% $771.82 +23.30%
    Apple AAPL $153.48 -0.65% $115.82 +32.51%
    Amazon AMZN $965.45 +0.87% $749.87 +28.74%
    Ebay EBAY $38.66 -0.13% $29.69 +30.21%
    Facebook FB $168.42 -0.91% $115.05 +46.38%
    PayPal PYPL $64.01 -0.33% $39.47 +62.17%
    Twitter TWTR $17.75 +0.91% $16.30 +8.89%
    Visa V $105.31 -0.27% $78.02 +34.97%
    VMware VMW $110.59 -0.01% $78.73 +40.46%



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

    The Bloomberg Dollar Spot Index (DXY) fell 0.12%, with the EUR up 0.16% to USD 1.1761.
    The Japanese JPY strengthened 0.11% to 112.72 per USD.


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

    Oil and Gas Futures

    Futures prices

    Prices are as at 15:49 EDT

    • NYMEX West Texas Intermediate (WTI): $49.85/barrel -1.13% Chart
    • ICE (London) Brent North Sea Crude: $55.73/barrel -0.48% Chart
    • NYMEX Natural gas futures: $2.94/MMBTU +1.62% Chart

    flag_australia AU: AiGroup Services PMI. Sep 2017

    Press Release Extract [ser_au_aig_psi]

    The Australian Industry Group Australian Performance of Services Index (Australian PSI®) fell 0.9 points to 52.1 in September (seasonally adjusted), signalling a marginal slowing in growth from August. Australian PSI® results above 50 points indicate expansion, with higher numbers indicating stronger rates of growth.

    All five of the activity sub-indexes in the Australian PSI® were above 50 points and indicating growth in September (seasonally adjusted), but four of them grew at a slower pace than in August. Sales (52.9 points), new orders (51.9) and employment (51.4) growth moderated while stocks (inventory) (51.8) built up at a slower rate. Supplier deliveries (52.6) returned to expansion. Capacity utilisation in the Australian PSI® fell to 77.1% of available capacity being utilised across the services sector in September.

    The Australian PSI® showed a marked variation in results across the sub-sectors in September. Six of the nine sub-sectors expanded in September (trend) with results above 50 points. Activity accelerated in finance and insurance (63.7 points), personal and recreational services (62.9), communications services (58.6) and health and community services (52.5 points). Wholesale trade (56.8 points) grew at about the same rate as in August. Growth in property and business services (52.4) decelerated.

    Reluctant consumer spending saw activity shrink at a faster rate in September in retail trade (43.1 points), while the index for the hospitality sub-sector (accommodation, cafes and restaurants) fell by 3.5 points to a record low of 35.7 points. Transport and storage slipped back into contraction at 48.7 points.

    Respondents to the Australian PSI® in the business-oriented sub-sectors noted positive demand coming from the construction and mining sectors, predominantly in the eastern states. Respondents in retail and hospitality are reporting reduced spending by consumers due to a mix of increased household electricity costs, flat income growth, and relatively poor consumer confidence. Businesses in Western Australia still appear to be suffering tougher conditions than those in the eastern states in September.

    Activity Sub Indexes

    • Sales grew at a slightly slower pace in September, with this sub-index falling by 0.6 points to 52.9 points (seasonally adjusted). Sales have grown in all but one month (February) so far this year.
    • Employment growth also moderated, with this sub-index falling by 1.1 point to 51.4 points. Employment in the Australian PSI® has expanded or remained stable in every month so far this year.
    • New orders decelerated in September, with this sub-index falling by 2.3 points to 51.9 points. September marked thirteen months of growth or stability for this key sub-index.
    • Stocks (inventories) in the Australian PSI® expanded again in September but at a slower pace than in August, with this sub-index dropping by 3.1 points to 51.8 points.
    • Supplier deliveries grew in September, at 52.6 points, after a relatively stable month in August (49.7 points).
    • Capacity utilisation across the services sector fell by 4.3 percentage points to 77.1% of available capacity in September in the Australian PSI®, but remained just above the annual average of 76.9%

    Prices Sub Indexes

    • Input prices decelerated in September, with this sub-index falling by 2.5 points to 56.8 points. Respondents are increasingly noting high energy costs as a key source of problematic input cost pressures. This is evident across almost all services sub-sectors.
    • The wages sub-index weakened by 1.5 points to 56.2 points in September, indicating some relief from wage pressures relative to August. This sub-index has indicated a slightly slower average rate of growth over the past year (56.5 points) than its long-run average (56.7 points on average since August 2009).
    • The sub-index for selling prices was almost unchanged at 47.4 points in September. This sub-index indicated falling prices for a third consecutive month and was the lowest monthly result since November 2016. This reflects the price-dampening effects of the recently higher Australian dollar (which makes imported goods and services cheaper) coupled with an extremely competitive market, weak local consumer demand and relatively weak background inflation.

    Retail Trade

    • The retail trade sub-sector’s index fell by 1.5 points to 41.3 points in September, indicating worsening conditions (trend). This marked a sixth consecutive month of contraction after better conditions in early 2017. Retail businesses in the Australian PSI® say competition is growing from online and offshore sellers, while local customers are reluctant to spend due to slow wages and increasing energy and housing costs.

    Wholesale Trade

    • The wholesale trade sub-sector’s index was steady at 56.8 points in September, indicating a solid pace of growth. The past thirteen months have been positive for this segment. This year’s recovery in wholesale trade activity reflects better business-to- business trading activity and possibly an increase in distribution activity generated by local and offshore internet sales to consumers.


    • The accommodation, cafes and restaurants (‘hospitality’) sub-sector’s index fell by 3.5 points to a record low of 35.7 points in September (trend). This marked 21 months of contractionary or flat conditions for this sub-sector. Consumers remain cautious with their discretionary spending and/or are choosing to spend it elsewhere.

    Health, Education and Community Services

    • The health, education and community services sub-sector’s index lifted by 0.2 points to 52.5 points in September. This marked a third month of expansion for this giant sub-sector (including private-sector health, welfare, community and education services), after a year of slower conditions in 2016-17.

    Personal and Recreational Services

    • The small personal and recreational services sub-sector’s index rose by 0.5 points to a record high of 62.9 points in September (trend). This sub-sector has expanded or been stable since June 2016. Consumers appear to be directing their discretionary spending to this sector’s personal and home-based services, instead of towards local retail goods and hospitality services (restaurants and local holiday accommodation).

    Property and Business Services

    • The large property and business services sub-sector’s index moderated by 0.2 points in September to 52.4 points, indicating a slight slowing in growth. This sub-sector has been expanding for the past year (trend). This sub-sector includes large professional and administrative services segments (e.g. legal, accounting, consulting, engineering and office services) and a smaller real estate and property management segment. This recent deceleration seems to reflect slower growth in real estate transactions and property-related activity in recent months.

    Finance and Insurance Services

    • The very large finance and insurance sub-sector’s index rose by 1.6 points to 63.7 points in September. This was the highest monthly result since July 2015 (trend). This sub-sector has been growing or stable since November 2014. This sub-sector includes banking, insurance, superannuation and financial advisory services.

    Communication Services

    • The communications services sub-sector’s index increased by 1.3 points to 58.6 points in September, indicating an accelerating recovery. This was the highest monthly result for this sub-index since July 2007 (trend) and marked a fourth month of recovery. Respondents from this sub-sector in the Australian PSI® report increased activity as a result of improved marketing and more consistent orders from customers.

    Transport and Storage Services

    • The transport and storage services sub-sector’s index fell by 1.5 points to 48.7 points in September (trend), indicating a slight contraction after four months of stable or mildly expansionary conditions. Recent sharp rises in energy costs and increasingly competitive conditions are the key challenges in this sub-sector. Several respondents noted that freight prices have been forced down due to increasing competition in 2017.

    Australian Industry Group, “Australian Services Index“, 4 Oct 2017 More

    flag_australia AU: CBA Services PMI. Sep 2017

    Press Release Extract [ser_au_psi]

    Key Findings

    September survey data revealed a further slowdown in Australian service sector business activity growth, with the pace of expansion the weakest seen since the series began in May 2016. However, growth in new orders picked up since August, which supported the strongest increase in employment in 2017 to date. Meanwhile, input prices continued to increase sharply, despite the rate of inflation weakening for the second month in a row.

    The headline figure derived from the survey is the Commonwealth Bank Australia Services Business Activity Index, which is designed to provide timely indications of changes in business activity in the Australian service sector. Readings above 50.0 signal an improvement in business activity on the previous month while readings below 50.0 show deterioration.

    The seasonally adjusted Business Activity Index fell from 54.2 in August, but remained above the crucial 50.0 value at 53.2 in September. This signalled a further expansion in services business activity, though the rate of growth was the weakest seen since data collection began in May 2016.


    Although business activity growth moderated to a fresh survey low, new business placed at services companies expanded at a quicker pace at the end of the third quarter. According to panellists, new projects and an improvement in underlying client demand supported increased sales.

    Stronger growth in new orders underpinned a further increase in employment at Australian services companies during September. Moreover, the rate of job creation picked up to a solid pace that was the quickest in nine months.

    Despite the sustained upturn in staff numbers, capacity pressures persisted in September, as shown by a further rise in backlogs of work. However, the rate of accumulation was moderate overall.

    Services companies in Australia signalled a further sharp increase in operating costs at the end of the third quarter. This was despite the rate of input cost inflation softening for the second month running. Anecdotal evidence indicated that a combination of supplier prices hikes and greater labour costs had pushed up overall cost burdens.

    As part of efforts to protect their margins, service providers raised their prices charged again in September. The extent to which selling prices increased was solid and similar to that seen in the previous month.

    Optimism towards future activity growth strengthened to a three-month high in September. Around two-thirds of monitored companies (67%) expect activity to increase over the next year, with confidence commonly linked to new marketing strategies and forecasts of expanding customer bases.

    Commonwealth Bank Composite PMI

    The Commonwealth Bank Composite Output Index is a GDP-weighted average of the Commonwealth Bank Manufacturing Output Index and the Commonwealth Bank
    Services Business Activity Index.

    Composite PMI data for Australia indicated that overall growth momentum eased for the third month running in September. This was shown by the seasonally adjusted Commonwealth Bank Composite Output Index declining from 54.1 in August to 53.1 in September. Although the rate of expansion was solid, it was the slowest in the 17-month series history.


    Commenting on the Commonwealth Bank Services and Composite PMI data, CBA’s Chief Economist, Michael Blythe, said:
    ‘The pace of service sector activity declined during the September quarter. But PMI readings remain at levels consistent with decent growth in the services economy. And the key leading indicator components relating to employment, new business and business expectations remain at elevated levels. The services sector is experiencing the same rapid increase in input costs as reported in the Manufacturing PMI. But services have been more successful in passing this cost increase through to prices charged. This outcome suggests that the demand side of the services equation remains resilient’.

    IHS Markit, “Commonwealth Bank Services PMI. Sep 2017“, 4 Oct 2017 More

    flag_europe EU: Retail Trade. Aug 2017

    Press Release Extract [ser_eu_retail]

    In August 2017 compared with July 2017, the seasonally adjusted volume of retail trade fell by 0.5% in the euro area (EA19), while it remained stable in the EU28, according to estimates from Eurostat, the statistical office of the European Union. In July, the retail trade volume decreased by 0.3% in the euro area and remained stable in the EU28.


    In August 2017 compared with August 2016, the calendar adjusted retail sales index increased by 1.2% in the euro area and by 2.0% in the EU28.

    Monthly comparison by retail sector and by Member State

    The 0.5% decrease in the volume of retail trade in the euro area in August 2017, compared with July 2017, is due to falls of 0.9% for automotive fuel, of 0.4% for non-food products and of 0.3% for “Food, drinks and tobacco”. In the EU28, the stable volume of retail trade is due to decreases of 0.5% for automotive fuel and of 0.1% for “Food, drinks and tobacco”, while non-food products rose by 0.2%.
    Among Member States for which data are available, the largest decreases in the total retail trade volume were registered in Portugal (-1.3%), Austria (-1.0%) and Belgium (-0.9%), while the highest increases were observed in Romania (+2.3%), the United Kingdom (+1.9%) and Malta (+1.5%).

    Annual comparison by retail sector and by Member State

    The 1.2% increase in the volume of retail trade in the euro area in August 2017, compared with August 2016, is due to rises of 2.3% for non-food products and of 1.1% for “Food, drinks and tobacco”, while automotive fuel fell by 0.2%. In the EU28, the 2.0% increase in retail trade volume is due to rises of 3.3% for non-food products, of 1.2% for “Food, drinks and tobacco” and of 0.8% for automotive fuel.
    Among Member States for which data are available, the highest increases in the total retail trade volume were registered in Romania (+15.8%), Slovenia (+7.5%), Malta (+6.9%), Slovakia (+6.8%) and Poland (+6.7%), while decreases were observed in Luxembourg (-25.6%) and Belgium (-2.4%).

    Eurostat, “Retail Trade. Aug 2017“, 4 Oct 2017 More

    flag_europe EU: Quarterly Balance of Payments. Q2/2017

    Press Release Extract [ser_eu_bop]

    The EU28 seasonally adjusted current account of the balance of payments recorded a surplus of €41.9 billion (1.1% of GDP) in the second quarter of 2017, down from a surplus of €49.4 billion (1.3% of GDP) in the first quarter of 2017 and from a surplus of €58.6 billion (1.6% of GDP) in the second quarter of 2016, according to estimates released by Eurostat, the statistical office of the European Union.

    In the second quarter of 2017 compared with the first quarter of 2017, based on seasonally adjusted data, the surplus of the goods account fell slightly (+€34.3 bn compared to +€34.5 bn) as did the surplus of the services account (+€39.5 bn compared to +€40.3 bn). The deficit of the primary income account increased (-€7.8 bn compared to -€2.2 bn), as did the deficit of the secondary income account (-€24.1 bn compared to -€23.2 bn). The deficit of the capital account decreased (-€13.4 bn compared to -€13.9 bn).


    Main partners

    In the second quarter of 2017, based on non-seasonally adjusted data, the EU28 recorded external current account surpluses with the USA (+€30.2 bn), Switzerland (+€22.0 bn), Hong Kong (+€6.9 bn), Brazil (+€5.9 bn) and Canada (+€5.3 bn). Deficits were registered with China (-€22.0 bn), Russia (-€6.6 bn), Japan (-€5.9 bn), offshore financial centres (-€3.0 bn) and India (-€0.5 bn).

    Financial account

    Based on non-seasonally adjusted data, direct investment assets of the EU28 increased in the second quarter of 2017 by €42.2 bn, while direct investment liabilities grew by €221.0 bn. As a result, the EU28 was a net recipient of direct investment in the second quarter of 2017 by €178.9 bn. Portfolio investment recorded a net outflow of €35.1 bn, while for other investment there was a net inflow of €7.2 bn.

    Eurostat, “Quarterly Balance of Payments. Q2/2017“, 4 Oct 2017 More

    flag_europe EU :IHS Markit Eurozone Composite PMI. Sep 2017

    Press Release Extract [ser_eu_psi]

    Key Findings:

    • Final Eurozone Composite Output Index: 56.7 (Flash: 56.7, August Final: 55.7)
    • Final Eurozone Services Business Activity Index: 55.8 (Flash: 55.6, August Final: 54.7)


    The eurozone economy ended the third quarter with a flourish as output growth accelerated to a four- month high in September, underpinned by the
    steepest gain in new work received for almost six- and-a-half years.

    At 56.7 in September, up from 55.7 in August, the final IHS Markit Eurozone PMI® Composite Output Index matched the earlier flash estimate. The outlook also remained bright, with business optimism rising to a four-month high.

    The headline index has signalled expansion throughout the past 51 months. However, its average over the third quarter as a whole (56.0) was slightly weaker than in the prior quarter (56.6).

    September saw rates of output expansion accelerate in both the manufacturing and service sectors, although the former continued to register the superior performance overall.

    Manufacturing production rose at the quickest pace since April 2011. The rate of expansion in services business activity improved to a four-month high and was one of the best seen over the past six years.

    Germany rose back to the top of the PMI Output Index rankings in September. Output expanded at its best pace since April 2011, supported by surging manufacturing sector growth aided by a steep gain in new export business. Ireland was in second position – despite seeing growth slip to a two-month low – while the revival in France gathered pace.

    Economic activity in France rose at the sharpest rate in over six years (since May 2011), with growth of output and new orders relatively evenly distributed across the manufacturing and service sectors. Spain saw its rate of economic expansion improve from August’s seven-month low while Italian growth was the weakest since March, but still solid overall.

    The upturn in the eurozone economy continued to test capacity, leading to the sharpest increase in backlogs of work since February 2011. Companies raised employment to one of the greatest extents over the past decade, with job creation registered across Germany, France, Italy, Spain and Ireland.

    Price pressures increased during September, with rates of inflation in input prices and output charges both hitting five-month highs.


    The upturn in the eurozone service sector regained momentum in September. Business activity rose at the fastest pace in four months, registering one of its steepest gains over the past six years. The outlook for the sector also remained bright, with business optimism improving to a four-month high.

    The final IHS Markit Eurozone PMI® Services Business Activity Index registered 55.8 in September, up from 54.7 in August and above the earlier flash estimate of 55.6. The headline index has signalled expansion for 50 successive months. However, the average reading over the third quarter (55.3) was weaker than in the prior quarter (56.0).

    Supporting the latest growth of business activity was a further robust increase in new work received, which rose at the quickest pace since March. Improved new business intakes tested capacity at service providers, leading to the steepest rise in backlogs of work for over six years.

    The need to raise capacity underpinned a marked increase in staffing levels, with the rate of job creation remaining close to the best registered over the past decade.

    All of the national service economies covered by the survey registered growth of business activity, new orders, employment and backlogs of work in September. The strongest increase in output was seen in Ireland, followed by France, as both saw growth accelerate to a four-month high.

    Spain (two-month high) and Germany (six-month high) also saw rates of activity growth improve. Only Italy saw a deceleration, with output rising at the slowest pace since March. Meanwhile, job creation picked up in Germany, France, Italy and Ireland, but slowed in Spain.

    Price pressures increased during September. Average input costs rose at the quickest rate in five months, leading to the steepest inflation of selling prices since March. Output charges increased in Germany, France, Spain and Ireland, but fell for the seventy-fourth month in a row in Italy.

    Comment: Chris Williamson, Chief Business Economist at IHS Markit said:

    ‘The final September PMI numbers round off an impressive third quarter for which the surveys point to GDP rising 0.7%. The economy enters the fourth quarter with business energized by inflows of new orders growing at the fastest rate for over six years and expectations of future growth reviving after a summer lull. Growth is also becoming increasingly broad- based, which should help make the upturn more sustainable as corporate profits, labour markets and demand improve across the region.

    The eurozone therefore looks increasingly able to withstand any political shocks and set for a strong end to the year.

    A rise in price pressures reflects the development of a sellers’ market for many goods and services as demand outstrips supply. As such, the survey suggests that deflationary forces have abated, fueling confidence that reflationary pressures are becoming more engrained in the economy.’

    IHS Markit , “IHS Markit Eurozone Composite PMI® and IHS Markit Eurozone Services PMI®. Sep 2017“, 4 Oct 2017 More

    flag_usa US: ADP National Employment Report. Sep 2017

    Press Release Extract [ser_us_adp]

    Private sector employment increased by 135,000 jobs from August to September according to the September ADP National Employment Report®.


    “In September, small businesses experienced a dip in hiring,” said Ahu Yildirmaz, vice president and co- head of the ADP Research Institute. “This is in part due to Hurricane’s Harvey and Irma which significantly impacted smaller retailers. “In addition, the continued slow down we have seen in small business hiring could be due to a lack of competitive compensation to attract skilled talent.”

    Mark Zandi, chief economist of Moody’s Analytics, said, “Hurricanes Harvey and Irma hurt the job market in September. Looking through the storms the job market remains sturdy and strong.”

    ADP Research Institute, “ADP National Employment Report. Sep 2017“, 4 Oct 2017 (08:15) More

    flag_usa US: Markit US Services PMI. Sep 2017

    Press Release Extract [ser_us_psi]

    Key findings:

    • PMI signals robust expansion in business activity
    • Upturn in new business remains steep despite easing since August
    • Inflationary pressures intensify.


    September survey data signalled a further rise in business activity across the US service sector. Although the rate of growth eased slightly compared with August, upturns in both activity and inflows of new work were strong compared to the average seen over the past two years. Sustained growth of output and new orders supported solid increases in staffing levels. Additional payroll numbers helped to alleviate capacity pressures.

    Meanwhile, inflationary pressures continued to intensify. Input price inflation was the fastest since June 2015, and charge inflation accelerated to the quickest in three years.

    The seasonally adjusted IHS Markit U.S. Services Business Activity Index registered 55.3 in September, down slightly from 56.0 in August. This indicated a strong end to the third quarter, and the fastest average quarterly growth so far this year. A number of survey respondents linked the rise in business activity to strong client demand in domestic markets.

    New business received by service sector firms expanded further in September. Despite the pace of growth easing slightly from August’s 25-month high, it remained solid. Anecdotal evidence suggested that higher new orders were fueled by new product development and robust client demand.

    On the price front, the rates of both input cost and output charge inflation accelerated in September. Cost burdens faced by service providers increased at the fastest pace since June 2015. A number of companies attributed the rise to recent hurricanes, which impacted energy, fuel and raw material prices. Average charges increased further, with inflation accelerating slightly to reach the quickest since September 2014.

    Employment growth in the service sector was solid in September, albeit easing to a three-month low. Service providers stated that staffing levels had risen due to a sustained increase in overall activity and resulting pressures on capacity. Notably, backlog accumulation also softened to a marginal rate.

    Activity expectations for the upcoming 12 months were robust in September, but the degree of optimism slipped to the lowest in seven months. Service sector firms noted that positive sentiment was linked to new business growth, although some respondents noted that there was heightened uncertainty surrounding future economic conditions.

    IHS Markit Final U.S. Composite PMI™
    The final seasonally adjusted IHS Markit U.S. Composite PMI™ Output Index fell to 54.8 in September, from 55.3 in August. The slower services sector expansion was accompanied by further subdued manufacturing output growth, with the rate of increase unchanged on August’s 14- month low.

    Despite easing since August, the average composite reading over the past three months signalled the fastest overall quarterly growth in 2017 so far.

    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:

    ‘Given the disruption caused by recent hurricanes, some pull-back in business activity was understandable, so the resilient reading of the September services PMI makes for encouraging reading. Looked at alongside the manufacturing PMI, the survey data point to GDP rising at an annualised rate of just over 2% in the third quarter. Growth is largely reliant on the services economy, however, as manufacturing lags behind, struggling in part due to the strong dollar.

    While rebuilding and a return to normal business conditions after the hurricanes will hopefully boost growth in the fourth quarter, it’s worrying to see business expectations about activity levels over the coming year drop in September. Measured across both manufacturing and services, future optimism is at its lowest since February, suggesting companies have become increasingly cautious about the outlook.

    However, while optimism has slipped, the ‘hard’ survey data on recent output, new orders and hiring trends remain solid. Combined with the further upturn in price pressures seen in September, the survey data will further fuel expectations that the Fed will be keen to hike interest rates again before the year is out. Average prices charged for goods and services rose at the fastest rate for three years in September, though it’s not yet clear how much of the rise reflected short-term hurricane effects.’

    IHS Markit, “IHS Markit US Services PMI. Sep 2017“, 4 Oct 2017 (09:45) More

    flag_usa US: ISM US Services PMI. Sep 2017

    Press Release Extract [ser_us_ism_psi]

    Economic activity in the non-manufacturing sector grew in September for the 93rd consecutive month, say the nation’s purchasing and supply executives in the latest Non-Manufacturing ISM® Report On Business®.

    The NMI® registered 59.8 percent, which is 4.5 percentage points higher than the August reading of 55.3 percent. This represents continued growth in the non-manufacturing sector at a faster rate. This is the highest reading since August 2005 when the index registered 61.3 percent.

    The Non-Manufacturing Business Activity Index increased to 61.3 percent, 3.8 percentage points higher than the August reading of 57.5 percent, reflecting growth for the 98th consecutive month, at a faster rate in September.

    The New Orders Index registered 63 percent, 5.9 percentage points higher than the reading of 57.1 percent in August.

    The Employment Index increased 0.6 percentage point in September to 56.8 percent from the August reading of 56.2 percent.

    The Prices Index increased substantially by 8.4 percentage points from the August reading of 57.9 percent to 66.3 percent, indicating prices increased in September for the fourth consecutive month. This is the highest reading since February 2012 when the index registered 67.6 percent. According to the NMI®, 15 non-manufacturing industries reported growth.

    The non-manufacturing sector has reflected strong growth in the month of September despite the impact on the supply chain from the recent hurricanes. Respondents’ comments indicate a good outlook for business conditions.

    Institute for Supply Management (ISM), “September 2017 Non-Manufacturing ISM® Report On Business®“, 4 Oct 2017 (10:00) More

    Global: JPMorgan Global Services PMI. Sep 2017

    Press Release Extract [ser_global_psi]

    The global service sector continued to make solid progress in September. Business activity rose at a similar pace to August’s two-year high, rounding off the best quarter since the second quarter of 2015.

    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 – posted 54.0 in September, down slightly from 54.1 in August. The index has signalled expansion for 98 consecutive months.


    Due to later than usual release dates, September data for India services and China services were not available for inclusion in the Global Services PMI numbers.

    Output increased across the business, consumer and financial services sectors. The strongest expansion was in financial services, with the rate of growth in business activity accelerating sharply to a three-month high on the back of the steepest increase in new orders since May.

    Although consumer services saw the weakest expansions in both new business and output, rates of increase picked up in both cases. Business service providers saw solid, albeit slower, growth of business activity and new work.

    By nation, output rose at faster rates in Germany, the UK, France, Spain, Russia and Ireland. Growth continued in the US, Japan and Australia (albeit weaker than in August), while Brazil returned to expansion after declines in the prior four months.

    Service sector employment rose again in September, with the pace of jobs growth staying close to recent highs. Staffing levels were raised in the US, the euro area, Japan, the UK, Russia and Australia, but lowered in Brazil.

    The outlook for the global service sector remained positive in September. Recent solid increases in new business combined with rising backlogs of work led companies to forecast output would be higher in one year’s time. However, the degree of positive sentiment was less marked than in the prior survey month.

    Price pressures edged higher in September. Average costs rose at the joint-quickest pace in over four years, leading to the steepest increase in output charges since April 2014.

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

    ‘Although September saw rates of expansion in output and new orders both slow, the PMI suggests growth during the third quarter as a whole was still the best seen for over two years. Further increases in backlogs of work and employment also suggest the sector maintains sufficient growth momentum to extend the current solid upturn through to year end.’

    J.P.Morgan and IHS Markit in association with ISM and IFPSM, “JPMorgan Global Services PMI. Sep 2017“, 4 Oct 2017 (11:00) More

    Global: JPMorgan Global Composite PMI. Sep 2017

    Press Release Extract [ser_global_composite_pmi]

    September saw the pace of global economic expansion maintained at August’s near two-and-a-half year high. The J.P.Morgan Global All-Industry Output Index held steady at 54.0, to signal a further solid increase in the combined output of the worldwide manufacturing and service sectors.

    The average headline index reading over the third quarter as a whole (53.8) was slightly above those of the prior two quarters (both 53.7) and the best growth outcome signalled on a quarterly basis for three years.


    September saw broadly similar rates of output expansion registered in both the manufacturing and service sectors. Although the latter saw a marginal easing in its rate of increase, it still slightly outpaced the former (which saw a mild acceleration) for the sixth month running.

    The latest expansion was also broad-based by manufacturing and services sub-sector, with output rising across all six categories covered by the survey. Three saw their rates of increase accelerate (consumer services, intermediate goods and financial services). The rest (business services, consumer goods and investment goods) all saw weaker growth than in August.

    Economic activity rose across all of the nations for which all-industry data for September were available. Rates of expansion improved in the euro area, the UK and Russia, while Brazil returned to growth after contractions in the prior three months. Output increased at slower rates in the US, Japan and Australia.

    Global all-industry employment rose again in September, taking the current sequence of job creation to 91 months. Although the rate of increase eased to its weakest since June, it remained among the best witnessed over the past decade. Staffing levels were raised in the US, the eurozone, Japan, the UK, Russia and Australia. In contrast, job cuts were signalled in Brazil for the thirty-first successive month.

    Price pressures strengthened in September. The rate of increase in input costs rose to an eight-month high, mainly reflecting a solid acceleration in purchase price inflation at manufacturers. Output charges rose at one of the quickest rates since selling price data were first compiled eight years ago, beaten only by that recorded in February 2011.

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

    ‘The global PMI suggests that underlying global growth is strong and steady, with recent performance the best in three years. This is providing a real spur to the labor market with job creation in recent months being among the best seen over the past decade. As output growth remains broad-based by sector, new order inflows solid and backlogs of work rising, the world economy looks primed to continue this solid upturn during the final quarter of the year.’

    J.P.Morgan and IHS Markit in association with ISM and IFPSM, “JPMorgan Global Composite PMI. Sep 2017“, 4 Oct 2017 (11:00) More

    flag_japan Japan update

    Currency: USD/JPY

    JPY movements
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    Stockmarket: Nikkei 225

    N225 movements
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    flag_china China update

    Currency: USD/CNY

    CNY movements
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    Stockmarket: CSI300

    China’s stock markets are closed for the Golden Week holiday.