Fri 3 Nov 2017


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  • Today at the stock market

    bull/bearA surge in shares of heavyweight Apple helped push up major Wall Street indexes on Friday, as investors also assessed a mixed U.S. labor market report. The S&P 500 and Dow industrials recorded their eighth consecutive weeks of gains, while the Nasdaq posted its sixth straight up week, as equities have climbed to record highs.

    • The S&P 500 index rose 7.99 points, or 0.31%, to 2,587.84.
    • The Dow Jones Industrial Average rose 22.93 points, or 0.1%, to 23,539.19.
    • The Nasdaq Composite index rose 49.49 points, or 0.74%, to 6,764.44.
    • Declining issues outnumbered advancing ones on the NYSE by a 1.09-to-1 ratio; on Nasdaq, a 1.02-to-1 ratio favored decliners.
    • About 6.7 billion shares changed hands in U.S. exchanges, above the 6.3 billion daily average over the last 20 sessions.

    Shares of Apple, the world’s most valuable publicly traded company, rose 2.6 percent as shoppers streamed into the company’s stores to buy its latest iPhone. Apple also gave a better-than-expected sales forecast for the holiday shopping season.

    U.S. job growth accelerated in October after hurricane-related disruptions in the prior month, the Labor Department said. But wages grew at their slowest annual pace in more than 1½ years in a sign that inflation probably will continue to undershoot the Federal Reserve’s 2% target.

    “It kind of confirms this Goldilocks-type scenario where it’s steady growth with really not a lot of inflationary pressure,” said Michael Dowdall, investment strategist at BMO Global Asset Management in Chicago.

    Apple was easily the biggest individual boost to the three indexes. The stock also helped boost the tech sector, which climbed 0.9% and led all major S&P 500 groups.

    “This is obviously the carry-over effect from Apple having a good quarter and a tremendous outlook,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.

    All 3 indexes rose in a week that saw a series of significant events, including the nomination of a new Fed chair and the long-awaited unveiling of a tax-cut bill from U.S. President Donald Trump’s fellow Republicans.

    In other corporate news, Qualcomm shares surged 12.7% after reports that Broadcom is exploring a deal to buy the smartphone chip maker. Broadcom shares rose 5.4%.

    Aetna shares rose 2.7% after Reuters reported U.S. pharmacy operator CVS Health and the health insurer are working toward finalizing merger terms and announcing a deal as early as December. CVS shares fell 0.2%.

    Third-quarter corporate reports also have continued at a heavy pace. With more than 400 of S&P 500 companies having reported, earnings for the quarter are expected to have climbed 8%, compared to an expectation of a 5.9% rise at the start of Oct 2017, according to Thomson Reuters I/B/E/S.

    American International Group shares sank 4.6% as investors reacted to a surprise $836 million boost to the insurance giant’s reserves.

    Starbucks shares rose 2.1% following results.Reuters

    Market indices

    :-) The S&P500, Dow Jones Industrial Average and NASDAQ Composite indices 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) 2,587.84 +0.30% 2,238.83 +15.58%
    DJIA INDU 23,539.19 +0.09% 19,762.60 +19.10%
    NASDAQ IXIC 6,764.44 +0.73% 5,383.12 +25.66%

    Portfolio Indices

    :-) Our AUD-denominated index closed above 4.000 for the first time, closing at a record 4.005.
    :-) Our USD-denominated index closed at a record 3.082, up 1.51% on its previous record of 3.035 set on 31 Oct 2017.

    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 3.081 +1.96% 2.105 +46.40%
    Valuation Rate USD/AUD 0.76974 -0.92% 0.72663 +5.93%
    AUD-denominated Index AUD 4.005 +2.89% 2.895 +38.32%

    Portfolio stock prices

    :-) Alphabet closed on a record high of $2,082.22, beating yesterday’s record of $2,068.55.
    :-) Class A shares closed at a record $1,049.99, up 0.67% on yesterday’s record of $1,042.97.
    :-) Class C shares closed at a record $1,032.23, up 0.65% on yesterday’s record of $1,025.59.
    :-) Apple closed on a record high of $172.50, beating its 31 Oct record of $169.04.
    :-) Amazon closed at a record high of $1,111.60, beating its 30 Oct 2017 record of $1,110.85.
    :-) PayPal closed at a record high of $73.39, beating its 31 Oct 2017 record of $72.56.
    :-) Visa closed at record high of $111.36, beating its 1 Nov 2017 record of $111.07.

    Stock Ticker Today Change 31 Dec 16 YTD
    Alphabet A GOOGL $1,049.99 +0.67% $792.45 +32.49%
    Alphabet C GOOG $1,032.23 +0.64% $771.82 +33.73%
    Apple AAPL $172.50 +2.61% $115.82 +48.93%
    Amazon AMZN $1,111.60 +1.58% $749.87 +48.23%
    Ebay EBAY $37.50 +0.42% $29.69 +26.30%
    Facebook FB $178.92 +0.00% $115.05 +55.51%
    PayPal PYPL $73.39 +1.57% $39.47 +85.93%
    Twitter TWTR $19.90 +0.96% $16.30 +22.08%
    Visa V $111.36 +0.34% $78.02 +42.73%
    VMware VMW $117.94 -0.81% $78.73 +49.80%

    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) gained 0.3% to erase a loss for the week.
    A Bloomberg basket of emerging market currencies fell 0.7%.
    The EUR lost less than 0.1% to USD 1.1610.
    Britain’s GBP was little changed at USD 1.3075.
    Bloomberg

    AUD

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

    Oil and Gas Futures

    Futures prices

    West Texas Intermediate crude settled at $54.64/barrel, near a 28-month high. Futures rose for a fourth straight week.Reuters

    Prices are as at 15:49 EDT

    • NYMEX West Texas Intermediate (WTI): $55.64/barrel +2.02% Chart
    • ICE (London) Brent North Sea Crude: $62.06/barrel +2.38% Chart
    • NYMEX Natural gas futures: $2.98/MMBTU +1.64% Chart

    Apple Mark Cap Approaching $1 Trillion

    Apple Inc’s shares rose to a record high on Friday as more analysts set a trillion-dollar valuation on the company, following a blowout fourth quarter and an upbeat forecast that quashed investor concerns around the iPhone X.

    The stock rose as much as 3.7% to $174.26, briefly breaching $900 billion in market value, amid declines in the broader market. The gains added nearly $32 billion to the company’s market capitalization. The Cupertino, California-based company also forecast a strong holiday quarter ahead, which will include the iPhone X that started selling on 3 Nov 2017.

    “We see iPhone X unlocking pent-up iPhone upgrades, especially in China, driving more than 20 percent iPhone unit growth and a revenue and earnings beat in 2018,” analyst Katy Huberty on Morgan Stanley said.

    The glass-and-steel $999 phone appeared to have brought back the frenzy associated with iPhone launches – long lines formed outside Apple stores across the world as fans flocked to buy the new phone.

    The company will make 30 million iPhone X units during the current quarter, Nomura Instinet analysts estimated, allaying production worries related to the phone.

    IPhone X’s launch follows weeks of concerns among analysts about the production of the phone, which for the first time includes new facial identification software to replace the fingerprint used on previous phones.

    Apple said on Thursday it expects first-quarter revenue of $84 billion to $87 billion, at the high end of analysts’ average expectation of $84.18 billion, according to Thomson Reuters I/B/E/S.

    “We – and many others – had feared that guidance could be weaker, reflecting only 9 weeks of the flagship iPhone X and limitations on supply,” Bernstein analyst Toni Sacconaghi said.

    At least 13 brokerages raised their price targets on the stock, with Citigroup making the most bullish move by raising its price target by $30 to $200.

    Of the 37 analysts that track the stock, as per Thomson Reuters data, 31 had a “buy”, or higher rating. None had a “sell”.

    With the latest brokerage actions, at least nine Wall Street analysts now have target prices that put Apple’s market value above $1 trillion. Drexel Hamilton’s Brian White is still the most bullish among Apple analysts tracked by Thomson Reuters, raising his target price further to $235.

    Apple’s fourth-quarter results underscored the company’s ability to drive growth not just on iPhones, but across its range of products, analysts said.

    The company’s suite now includes five different iPhone models, the iPad, the Mac and the Apple Watch as well as its fast-growing services.

    Apple said it sold 46.7 million iPhones in the fourth quarter ended Sept. 30, above analysts’ estimates of 46.4 million, according to financial data and analytics firm FactSet. Mac and iPad sales too were above the estimates of most analysts.Reuters

    flag_australia AU: Commonwealth Bank Services and Composite PMI. Oct 2017

    Press Release Extract [ser_au_psi]

    Service Sector

    au_cba_psi_20171103

    Business Activity:

    • Oct-17: 53.0 (Expansion, slower rate of growth)
    • Sep-17: 53.2 (Expansion, slower rate of growth)

    Business activity levels in the Australian service sector improved in October, albeit at the weakest pace in the series’ 18-month history. That said, output growth remained solid. Meanwhile, a softer upturn in new orders coincided with the slowest rate of job creation since data collection began. Nonetheless, firms reported that demand was strong enough to warrant increases in output prices, as input costs continued to tick-up.

    Although business activity growth weakened, it remained solid overall. Panel members reported that new contract wins supported the rise in output. Indeed, new orders placed with service providers rose in October. The pace of expansion in new work was strong, despite easing since September.

    Concurrently, outstanding work increased further. The rate of accumulation was moderate and broadly similar to September.

    Softer growth of new work did not prevent service providers from raising selling prices. According to anecdotal evidence, sustained improvements in demand prompted companies to increase output charges. Moreover, the rate of inflation accelerated to the most marked in the series’ 18-month history.

    Meanwhile, input prices faced by Australian services firms remained on an inflationary path in October. Survey respondents signalled that higher wage bills underpinned the rise in cost burdens. Albeit sharp, the rate of input price inflation eased for the third consecutive month.

    A number of panellists indicated that wages rose in line with difficulties in hiring staff. Staff levels increased in October, but the rate of job creation was the slowest registered since data were first collected in May 2016.

    Lastly, a positive outlook regarding future activity levels was maintained in October. Organic growth and new marketing initiatives were cited by companies anticipating growth over the coming 12 months as reasons underpinning optimism.

    Commonwealth Bank Composite PMI®

    au_cba_composite_pmi_20171103

    Output:

    • Oct-17 53.1 (Expansion, unchanged)
    • Sep-17 53.1 (Expansion, slower rate of growth)

    The seasonally adjusted Commonwealth Bank Composite Output Index remained in expansionary territory in October to indicate an increase in private sector activity. That said, with the index reading unchanged from September’s 53.1, the rate of growth was maintained at the joint-slowest in the series’ 18-month history

    Commonwealth Bank of Australia, “Commonwealth Bank Services and Composite PMI “, 3 Nov 2017 More

    flag_australia AU: Retail Trade. Sep 2017

    Press Release Extract [ser_au_trade]

    Australian retail turnover was relatively unchanged (0.0 per cent) in September 2017, seasonally adjusted, according to the latest Australian Bureau of Statistics (ABS) Retail Trade figures. This follows a fall of -0.5 per cent in August 2017.

    In seasonally adjusted terms, there were rises in food retailing (0.6 per cent), department stores (2.1 per cent), and cafes, restaurants and takeaway food services (0.3 per cent). There were falls in other retailing (-1.7 per cent), household goods retailing (-0.4 per cent), and clothing, footwear and personal accessory retailing (-0.7 per cent) in September 2017.

    In seasonally adjusted terms, there were rises in New South Wales (0.2 per cent), Queensland (0.3 per cent), South Australia (0.7 per cent), Tasmania (0.6 per cent), and the Australian Capital Territory (0.1 per cent). There were falls in Western Australia (-1.3 per cent), and the Northern Territory (1.7 per cent). Victoria was relatively unchanged (0.0 per cent).

    The trend estimate for Australian retail turnover was relatively unchanged (0.0 per cent) in September 2017 and relatively unchanged (0.0 per cent) in August 2017. Compared to September 2016 the trend estimate rose 2.0 per cent.

    Online retail turnover contributed 4.4 per cent to total retail turnover in original terms.

    In seasonally adjusted volume terms, turnover rose 0.1 per cent in the September quarter 2017, following a rise of 1.5 per cent in the June quarter 2017. ‘The main contributor to the quarterly volume rise was food retailing (0.9 per cent) but there was also rises in clothing, footwear and personal accessory retailing (0.7 per cent) and other retailing (0.4 per cent). A fall in Household goods retailing (-1.6 per cent) offset these rises,’ said Ben James, the Director of Quarterly Economy Wide Surveys.

    Australian Bureau of Statistics, “8501.0 – Retail Trade, Australia, Sep 2017“, 3 Nov 2017 More

    flag_usa US: International Trade in Goods and Services. Sep 2017

    Press Release Extract [ser_us_trade]

    The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $43.5 billion in September, up $0.7 billion from $42.8 billion in August, revised. September exports were $196.8 billion, $2.1 billion more than August exports. September imports were $240.3 billion, $2.8 billion more than August imports.

    us_trade_20171104

    The September increase in the goods and services deficit reflected an increase in the goods deficit of $0.6 billion to $65.4 billion and a decrease in the services surplus of $0.2 billion to $21.9 billion.

    Year-to-date, the goods and services deficit increased $34.5 billion, or 9.3 percent, from the same period in 2016. Exports increased $93.0 billion or 5.6 percent. Imports increased $127.5 billion or 6.3 percent.

    Goods and Services Three-Month Moving Averages

    The average goods and services deficit decreased less than $0.1 billion to $43.3 billion for the three months ending in September.

    • Average exports of goods and services increased $0.6 billion to $195.4 billion in September.
    • Average imports of goods and services increased $0.6 billion to $238.6 billion in September.

    Year-over-year, the average goods and services deficit increased $3.0 billion from the three months ending in September 2016.

    • Average exports of goods and services increased $8.4 billion from September 2016.
    • Average imports of goods and services increased $11.4 billion from September 2016.

    Exports

    Exports of goods increased $1.8 billion to $130.6 billion in September.

    Exports of goods on a Census basis increased $2.1 billion.

    • Industrial supplies and materials increased $1.9 billion.
      o Crude oil increased $1.1 billion.
      o Nonmonetary gold increased $0.3 billion.
    • Other goods increased $0.8 billion.
    • Consumer goods decreased $0.2 billion.
      o Pharmaceutical preparations decreased $1.0 billion.

    Net balance of payments adjustments decreased $0.3 billion.

    Exports of services increased $0.3 billion to $66.2 billion in September.

    • Transport increased $0.3billion.

    Imports

    Imports of goods increased $2.4 billion to $196.0 billion in September.

    Imports of goods on a Census basis increased $2.5 billion.

    • Capital goods increased $1.5 billion.
      o Semiconductors increased $0.5 billion.
      o Civilian aircraft increased $0.3 billion.
    • Industrial supplies and materials increased $1.1 billion.
      o Other petroleum products increased $0.7 billion.
    • Automotive vehicles, parts, and engines decreased $0.6 billion.
      o Passenger cars decreased $0.5 billion.

    Net balance of payments adjustments decreased $0.1 billion.

    Imports of services increased $0.4 billion to $44.3 billion in September.

    • Transport increased $0.3billion.

    Real Goods in 2009 Dollars – Census Basis
    The real goods deficit increased less than $0.1 billion to $62.2 billion in September.

    • Real exports of goods increased $0.9 billion to $125.7 billion.
    • Real imports of goods increased $1.0 billion to $187.9 billion.

    Goods by Selected Countries and Areas: Monthly – Census Basis

    The September figures show surpluses, in billions of dollars, with Hong Kong ($2.7), South and Central America ($2.2), Brazil ($0.8), United Kingdom ($0.7), Singapore ($0.7), OPEC ($0.6), Saudi Arabia ($0.6), and Canada ($0.1). Deficits were recorded, in billions of dollars, with China ($29.9), European Union ($14.6), Germany ($5.9), Japan ($5.9), Mexico ($5.1), Italy ($2.9), South Korea ($2.4), India ($2.3), Taiwan ($1.5), and France ($1.2).

    • The deficit with Germany increased $1.1 billion to $5.9 billion in September. Exports increased less than $0.1 billion to $4.5 billion and imports increased $1.1 billion to $10.4 billion.
    • The deficit with India increased $0.7 billion to $2.3 billion in September. Exports decreased $0.3 billion to $2.1 billion and imports increased $0.4 billion to $4.4 billion.
    • The balance with members of OPEC shifted from a deficit of $0.8 billion to a surplus of $0.6 billion in September. Exports increased $1.0 billion to $5.2 billion and imports decreased $0.4 billion to $4.6 billion.

    Revisions

    Revisions to August exports

    • Exports of goods were revised down $0.4 billion.
    • Exports of services were revised down $0.2 billion.

    Revisions to August imports

    • Imports of goods were revised down less than $0.1 billion.
    • Imports of services were revised down $0.2 billion.

    Bureau of Economic Analysis, “International Trade in Goods and Services. Sep 2017“, 3 Nov 2017 (08:30) More

    flag_usa US: Employment Situation (Jobs Report). Oct 2017

    Press Comment: Reuters

    U.S. job growth accelerated in October after hurricane-related disruptions in the prior month, but wages grew at their slowest annual pace in more than 1½ years in a sign that inflation probably will remain benign.

    Nonfarm payrolls increased by 261,000 last month as 106,000 leisure and hospitality workers returned to work, the Labor Department said in its closely watched employment report on Friday. That was the largest gain since July 2016 but below economists’ expectations for a jump of 310,000 jobs.

    Data for September was revised to show a gain of 18,000 jobs instead of a decline of 33,000 as previously reported.

    The White House, which is pushing a Republican-backed package of tax cuts to boost economic growth and employment, trumpeted the payrolls gains. “Jobs, Jobs, Jobs!” President Donald Trump tweeted after the release of the report.

    But Nancy Pelosi, the Democratic leader in the U.S. House of Representatives, said in a statement that the report showed Americans were continuing to be denied bigger paychecks by Republicans’ “billionaires-first agenda.”

    Average hourly earnings slipped one cent in October, leaving them unchanged in percentage terms, in part due to the return of the lower-paid leisure and hospitality workers. Wages shot up 0.5 percent in September. They were up 2.4 percent on a year-on-year basis last month, the smallest gain since February 2016, after a 2.8 percent advance in the prior month.

    October’s job growth acceleration reinforced the Federal Reserve’s assessment on Wednesday that “the labor market has continued to strengthen,” and the sluggish wage data did little to change expectations it will raise interest rates in December.

    “The weakness in wages will not go unnoticed at the Fed, particularly for members that remained more concerned over the inflation outlook. Overall, sustained job growth and labor market slack at pre-crisis lows keeps December in play,” said Michael Hanson, chief U.S. economist at TD Securities in New York.Reuters

    Press Release Extract [ser_us_jobs]

    Total nonfarm payroll employment rose by 261,000 in October, and the unemployment rate edged down to 4.1 percent, the U.S. Bureau of Labor Statistics reported today. Employment in food services and drinking places increased sharply, mostly offsetting a decline in September that largely reflected the impact of Hurricanes Irma and Harvey. In October, job gains also occurred in professional and business services, manufacturing, and health care.

    Household Survey Data

    The unemployment rate edged down by 0.1 percentage point to 4.1 percent in October, and the number of unemployed persons decreased by 281,000 to 6.5 million. Since January, the unemployment rate has declined by 0.7 percentage point, and the number of unemployed persons has decreased by 1.1 million.

    us_ue_20171103

    In October, the number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 1.6 million and accounted for 24.8 percent of the unemployed.

    The labor force participation rate decreased by 0.4 percentage point to 62.7 percent in October but has shown little movement on net over the past 12 months. The employment-population ratio declined by 0.2 percentage point over the month to 60.2 percent, after increasing by 0.3 percentage point in September. The employment-population ratio is up by 0.5 percentage point over the year.

    The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) declined by 369,000 to 4.8 million in October. 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 full-time jobs. Over the past 12 months, the number of involuntary part-time workers has decreased by 1.1 million.

    In October, 1.5 million persons were marginally attached to the labor force, little changed from a year earlier. (The 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 524,000 discouraged workers in October, essentially unchanged 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 1.0 million persons marginally attached to the labor force in October had not searched for work for reasons such as school attendance or family responsibilities.

    Establishment Survey Data

    Total nonfarm payroll employment increased by 261,000 in October, after changing little in September (+18,000). Employment in food services and drinking places increased sharply over the month, mostly offsetting a decline in September that largely reflected the impact of Hurricanes Irma and Harvey. In October, employment also increased in professional and business services, manufacturing, and health care.

    us_jobs_20171103

    Employment in food services and drinking places rose sharply in October (+89,000), following a decrease of 98,000 in September when many workers were off payrolls due to the hurricanes.
    Professional and business services added 50,000 jobs in October, about in line with its average monthly gain over the prior 12 months.

    Manufacturing employment rose by 24,000 in October, with job gains in computer and electronic products (+5,000) and chemicals (+4,000). Employment in fabricated metals continued to trend up (+4,000). Manufacturing has added 156,000 jobs since a recent employment low in November 2016.

    Health care added 22,000 jobs in October. Employment in ambulatory health care services continued to trend up over the month (+16,000). Health care has added an average of 24,000 jobs per month thus far in 2017, compared with an average gain of 32,000 per month in 2016.

    Employment in other major industries, including mining, construction, wholesale trade, retail trade, transportation and warehousing, information, financial activities, and government, changed little in October.

    The average workweek for all employees on private nonfarm payrolls was unchanged at 34.4 hours in October. In manufacturing, the workweek increased by 0.2 hour to 41.0 hours, and overtime edged up by 0.1 hour to 3.5 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls edged up by 0.1 hour to 33.7 hours.

    Average hourly earnings for all employees on private nonfarm payrolls, at $26.53, were little changed in October (-1 cent), after rising by 12 cents in September. Over the past 12 months, average hourly earnings have increased by 63 cents, or 2.4 percent. In October, average hourly earnings of private- sector production and nonsupervisory employees, at $22.22, were little changed (-1 cent).

    The change in total nonfarm payroll employment for August was revised up from +169,000 to +208,000, and the change for September was revised up from -33,000 to +18,000. With these revisions, employment was 90,000 higher 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 162,000 over the last 3 months.

    Bureau of Labor Statistics, “The Employment Situation (Jobs Report). Oct 2017“, 3 Nov 2017 (08:30) More

    flag_usa US: Non-Manufacturing PMI. Oct 2017

    Press Release Extract [ser_us_psi]

    Key findings:

    • Output growth in line with that seen in September
    • Upturn in new business softens to six-month low
    • Input price inflation eases to seven-month low.

    us_psi_20171103

    October survey data indicated a further rise in business activity across the US service sector. The rate of expansion was in line with that seen in September and strong overall. New business, however, grew at a weaker pace and signalled the softest upturn since April. Meanwhile, employment levels expanded at a solid rate, and backlogs also continued to rise. On the prices front, input costs and output charges rose further but eased to seven- and six-month lows, respectively. The latest survey data signalled robust business confidence, with the degree of optimism rising from that seen in September.

    The seasonally adjusted IHS Markit U.S. Services Business Activity Index registered 55.3 in October, unchanged from that seen in September. The latest index figure indicated a strong increase in overall business activity across the US service sector. Moreover, the rate of expansion was slightly faster than the long-run series average. Anecdotal evidence linked the rise in output to robust client demand and more favourable business conditions.

    New business received by service providers continued to rise in October. A number of survey respondents noted that the increase was due to stronger business investment. That said, the pace of the expansion eased to a six-month low.

    Operating costs increased further in October, but the rate of inflation softened to the slowest since March. Panellists stated that inflation was underpinned by higher raw material and transportation costs, with some linking this to the continued disruption from of the recent hurricanes.

    Subsequently, firms sought to pass higher costs onto clients through a rise in average prices charged. Some monitored companies suggested that resilient demand conditions enabled the increase in output prices. That said, the pace of inflation eased to a six-month low.

    Meanwhile, workforce numbers grew at a solid rate that had accelerated from that seen in the previous survey period. Job creation was linked to greater business requirements and rising client demand.

    Backlog accumulation, however, softened to a four- month low. Notably, the rate of growth in outstanding business was only fractional overall.

    Business expectations among service providers remained robust in October, with monitored firms reporting a stronger degree of confidence than in September. Panellists attributed this to more favourable market conditions and higher client demand.

    IHS Markit Final U.S. Composite PMI™

    The final seasonally adjusted IHS Markit U.S. Composite PMI™ Output Index rose to 55.2 in October, up from 54.8 in September. An accelerated upturn in manufacturing production, and strong growth in service sector business activity supported a steep overall expansion.

    The latest composite figure also signalled the second-fastest upturn since January.

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

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

    ‘The services PMI survey highlights the dilemma facing the Fed as it seeks to determine the right policy course amid signs of solid growth but soft inflation.

    ‘Together with the manufacturing PMI, which rose higher in October as hurricane-related supply chain disruptions eased, the latest services survey is consistent with underlying growth in the economy of approximately 3%, as well as buoyant jobs growth.

    ‘With the data for October setting the scene for another robust GDP increase in the fourth quarter, a December rate hike is very much on the cards.

    ‘However, a drop in inflationary pressures adds an element uncertainty to the picture. Having been buoyed by supply chain disruptions in prior months, input cost pressures eased at the start of the fourth quarter, and the rate of increase of average prices charged for goods and services dropped markedly.

    ‘While the Fed may likely tilt towards hiking in December on the back of robust economic growth, much may depend on the data flow in coming weeks for signs that stronger growth is feeding through to higher prices.’

    IHS Markit, “Non-Manufacturing PMI. Oct 2017“, 3 Nov 2017 More

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

    Press Release Extract [ser_us_ism_psi]

    The NMI® registered 60.1 percent, which is 0.3 percentage point higher than the September reading of 59.8 percent. This represents continued growth in the non-manufacturing sector at a slightly faster rate. This is the highest NMI® reading since the index’s debut in 2008. The highest reading among pre-2008 composite index calculations is 61.3 percent in August 2005.

    The Non-Manufacturing Business Activity Index increased to 62.2 percent, 0.9 percentage point higher than the September reading of 61.3 percent, reflecting growth for the 99th consecutive month, at a slightly faster rate in October.
    The New Orders Index registered 62.8 percent, 0.2 percentage point lower than the reading of 63 percent in September.
    The Employment Index increased 0.7 percentage point in October to 57.5 percent from the September reading of 56.8 percent.
    The Prices Index decreased by 3.6 percentage points from the September reading of 66.3 percent to 62.7 percent, indicating prices increased in October for the fifth consecutive month.

    According to the NMI®, 16 non-manufacturing industries reported growth. The non-manufacturing sector has reflected the third consecutive month of strong growth. Respondent comments continue to indicate a positive outlook for business conditions, and the economy as we begin the fourth quarter.”

    Industry Performance

    The 16 non-manufacturing industries reporting growth in October — listed in order — are: Agriculture, Forestry, Fishing & Hunting; Construction; Transportation & Warehousing; Mining; Real Estate, Rental & Leasing; Utilities; Other Services; Wholesale Trade; Management of Companies & Support Services; Retail Trade; Finance & Insurance; Health Care & Social Assistance; Public Administration; Information; Professional, Scientific & Technical Services; and Accommodation & Food Services.

    The two industries reporting contraction in October are: Educational Services; and Arts, Entertainment & Recreation.

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

    flag_usa US: Durables. Sep 2017

    Press Release Extract [ser_us_dur]

    Summary

    New orders for manufactured goods in September, up three of the last four months, increased $6.5 billion or 1.4 percent to $478.5 billion, the U.S. Census Bureau reported today. This followed a 1.2 percent August increase. Shipments, up nine of the last ten months, increased $3.9 billion or 0.8 percent to $480.4 billion. This followed a 0.6 percent August increase. Unfilled orders, up following two consecutive monthly decreases, increased $2.7 billion or 0.2 percent to $1,135.0 billion. This followed a virtually unchanged August decrease. The unfilled orders-to-shipments ratio was 6.70, down from 6.76 in August. Inventories, up ten of the last eleven months, increased $4.4 billion or 0.7 percent to $660.8 billion. This followed a 0.6 percent August increase. The inventories-to-shipments ratio was 1.38, unchanged from August.

    us_dur_20171103

    New Orders

    New orders for manufactured durable goods in September, up three of the last four months, increased $4.7 billion or 2.0 percent to $238.4 billion, down from the previously published 2.2 percent increase. This followed a 2.1 percent August increase. Transportation equipment, also up three of the last four months, led the increase, $3.6 billion or 4.7 percent to $80.9 billion. New orders for manufactured nondurable goods increased $1.8 billion or 0.8 percent to $240.1 billion.

    Shipments

    Shipments of manufactured durable goods in September, up four of the last five months, increased $2.1 billion or 0.9 percent to $240.3 billion, down from the previously published 1.0 percent increase. This followed a 0.7 percent August increase. Transportation equipment, up two of the last three months, led the increase, $0.8 billion or 1.1 percent to $79.5 billion. Shipments of manufactured nondurable goods, up five of the last six months, increased $1.8 billion or 0.8 percent to $240.1 billion. This followed a 0.4 percent August increase. Petroleum and coal products, up three consecutive months, drove the increase, $2.1 billion or 5.0 percent to $44.9 billion.

    Unfilled Orders

    Unfilled orders for manufactured durable goods in September, up following two consecutive monthly decreases, increased $2.7 billion or 0.2 percent to $1,135.0 billion, unchanged from the previously published increase. This followed a virtually unchanged August decrease. Transportation equipment, also up following two consecutive monthly decreases, led the increase, $1.4 billion or 0.2 percent to $771.9 billion.

    Inventories

    Inventories of manufactured durable goods in September, up fourteen of the last fifteen months, increased $2.6 billion or 0.6 percent to $403.9 billion, unchanged from the previously published increase. This followed a 0.5 percent August increase. Transportation equipment, up three consecutive months, led the increase, $1.0 billion or 0.7 percent to $131.0 billion. Inventories of manufactured nondurable goods, up four consecutive months, increased $1.8 billion or 0.7 percent to $256.8 billion. This followed a 0.7 percent August increase. Petroleum and coal products, up three consecutive months, led the increase, $1.8 billion or 5.0 percent to $38.6 billion. By stage of fabrication, September materials and supplies increased 0.8 percent in durable goods and increased 1.9 percent in nondurable goods. Work in process increased 0.8 percent in durable goods and increased 1.0 percent in nondurable goods. Finished goods increased 0.2 percent in durable goods and decreased 0.4 percent in nondurable goods.

    US Census Bureau, “Monthly Full report on Manufacturers’ Shipments, Inventories and Orders. Sep 2017“, 3 Nov 2017 (10:00) More

    flag_japan Japan update

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    flag_china China update

    Caixin Non-Manufacturing PMI. Oct 2017

    Press Release Extract [ser_cn_psi]

    Key points:

    • Services activity expands modestly, while manufacturing output rises only slightly
    • Employment levels remain relatively stagnant
    • Manufacturers continue to register sharper increase in cost burdens than service providers.

    cn_psi_20171103

    The Caixin China Composite PMI™ data (which covers both manufacturing and services) pointed to only a marginal increase in Chinese business activity at the start of the fourth quarter. At 51.0 in October, the Composite Output Index fell from 51.4 in September to signal the weakest pace of expansion since June 2016.

    The softer increase in overall output was largely driven by a further slowdown in manufacturing production growth. Output at Chinese goods producers rose at only a marginal pace that was the weakest since June. Meanwhile, growth in Chinese services activity picked up from September’s 21-month low, but was modest overall and remained weaker than the historical average. This was highlighted by the seasonally adjusted Caixin China General Services Business Activity Index rising from 50.6 to 51.2 in October.

    New business increased across both the manufacturing and service sectors during October. Growth in new work picked up slightly at manufacturers, helped in part by a stronger upturn in export sales, but remained moderate overall. Services companies meanwhile registered a modest increase in new order books that was similar to that recorded in September.

    Employment at the composite level was little-changed for the third month running in October, as further job shedding at manufacturers continued to offset hiring at services companies. Payrolls numbers at manufacturers declined at a modest pace, with a number of companies linking lower employment to company down-sizing policies. Meanwhile job creation at service providers remained marginal amid reports that firms hired additional workers in line with business requirements.

    Sustained growth in new work and limited capacity led to a further build-up in outstanding business at manufacturing companies in October. Notably, the rate of accumulation was the joint-strongest since March 2011 (on par with July 2016). In contrast, services companies signalled a marginal drop in the level of work-in-hand (but not yet completed) for the second month in a row. At the composite level, unfinished business increased at a modest pace that was faster than in September.

    Average input costs rose in both the manufacturing and service sectors at the start of the fourth quarter, albeit to varying degrees. Manufacturers registered a further sharp increase in cost burdens that was among the fastest seen since early-2011. According to panellists, greater raw material prices and stock shortages had led suppliers to hike prices in October. Services companies meanwhile noted only a moderate increase in input prices, despite the rate of inflation strengthening to a four-month high. At the composite level, the rate of input cost inflation was unchanged from September’s eight-month record.

    Manufacturing companies raised their prices charged again in October. Though solid, the rate of inflation was weaker than September’s nine-month high. Service providers meanwhile raised their prices at a pace that, though modest, was the quickest seen since August 2015. Output charges at the composite level rose for the fifth successive month and at a moderate pace.

    Optimism towards the 12-month business outlook weakened to a three-month low across the manufacturing sector, but improved slightly at services companies. Nonetheless, the degree of sentiment at the composite level remained relatively subdued, and was the lowest seen since July.

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

    “The Caixin China General Services Business Activity Index rose 0.6 points from the previous month to 51.2 in October. The sub-index of new business declined for the second month in a row, while the sub-indices of input prices and prices charged continued to go up. The Caixin China Composite Output Index, mainly dragged down by slower growth in output in the manufacturing sector, fell 0.4 points from September to 51.0 in October, the lowest level since June 2016. The Caixin PMIs for October showed that the economy had a relatively weak start to the fourth quarter. However, monetary policy is unlikely to be loosened unless major downside risks emerge.”

    IHS Markit, “Caixin China General Services PMI™ – Chinese business activity expands at weakest pace for 16 months“, 3 Nov 2017 More

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