Tue 5 Dec 2017


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  • Today at the stock market

    bull/bearWall Street fell on Tuesday as a technology rebound lost steam and Walt Disney Co shares dipped, while investors assessed how a Republican U.S. tax overhaul would impact corporate earnings.

    The S&P 500 fell for a third straight session, a streak not seen since early Aug 2017, trimming the index’s rally this year to 17%. All three major indexes moved sharply lower late in the session.

    • The S&P 500 index fell 0.37% to 2,629.57
    • The Dow Jones Industrial Average fell 0.45 percent to 24,180.64 points
    • The Nasdaq Composite index fell 0.19% to 6,762.21.
    • 10 of the 11 major S&P sectors fell, led by losses in telecom services and utilities.
    • Declining issues outnumbered advancing ones on the NYSE by a 1.80-to-1 ratio; on Nasdaq, a 1.83-to-1 ratio favored decliners.
    • About 6.9 billion shares changed hands on U.S. exchanges, just above the 6.7 billion daily average for the past 20 trading days, according to Thomson Reuters data.

    Tax Bill
    The bill passed on Saturday by Republican senators included a last-minute change retaining the corporate alternative minimum tax, or AMT, which had initially been removed.

    That put Senate Republicans on a collision course with Republicans in the U.S. House of Representatives, whose own tax bill repealed the corporate AMT and who are already calling for the tax to be eliminated in the final legislation. Including the AMT could negate parts of the bill seen as beneficial to tech companies and other corporations.

    “Sentiment still remains that tax reform will get done and we will get a 20 percent tax rate, and that will boost earnings significantly,” said Lindsey Bell, an investment strategist at CFRA Research. Such a tax rate cut could boost S&P 500 earnings next year by an extra 9%, Bell said.

    Investors have been switching their bets among sectors in recent days capitalize on a U.S. tax-cut package moving swiftly through Congress. “We are still trying to sort out the winners and losers under tax legislation,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia. Meanwhile, Tuz said, investors may be selling their stock winners from this year’s record-setting rally “to lock some of that in or diversify some of it away into things that had not done as well.”

    Technology

    Investors have been selling technology shares recently, bidding up prices for banks, telecoms and transports in a rotation into groups expected to particularly benefit from passage of U.S. bill designed to slash corporate taxes.

    Buoyed by a 2.53% increase in Electronic Arts Inc, the S&P 500 information technology index ended up 0.21%, but pared earlier gains of as much as 1.39%.

    Shares of Twenty-First Century Fox fell 0.30% after a report that Walt Disney was in the lead to acquire much of Fox’s media empire, though rival suitor Comcast Corp remained in contention. Disney shares fell 2.72% and Comcast slipped 1.98%.

    The year’s top-performing sector was still down nearly 4% over the past week, with investors shifting money to banks, retailers and other stocks seen as likely to benefit the most from tax cuts promised by U.S. President Donald Trump.

    “You don’t want things to slip away at the end of the year, so it’s tempting to take things off the table, maybe buy something that’s been beaten up,” said Frank Gretz, a analyst for Wellington Shields & Co, a brokerage in New York.

    Other Sectors

    McDonald’s rose 1.37%, providing the biggest boost to the Dow, after Jefferies upgraded the stock to a “buy” rating.

    Toll Brothers Inc fell 7.36% after the luxury homebuilder’s profit and revenue missed analysts’ expectations as it sold homes at prices lower than its own estimates.Reuters and Reuters

    Market indices

    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) 2,629.57 -0.38% 2,238.83 +17.45%
    DJIA INDU 24,180.64 -0.46% 19,762.60 +22.35%
    NASDAQ IXIC 6,762.21 -0.20% 5,383.12 +25.61%

    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 3.038 +0.16% 2.105 +44.32%
    Valuation Rate USD/AUD 0.76596 +0.20% 0.72663 +5.41%
    AUD-denominated Index AUD 3.967 -0.04% 2.895 +37.02%

    Portfolio stock prices

    Stock Ticker Today Change 31 Dec 16 YTD
    Alphabet A GOOGL $1019.60 +0.76% $792.45 +28.66%
    Alphabet C GOOG $1005.15 +0.64% $771.82 +30.23%
    Apple AAPL $169.64 -0.10% $115.82 +46.46%
    Amazon AMZN $1141.57 +0.67% $749.87 +52.23%
    Ebay EBAY $36.81 +3.10% $29.69 +23.98%
    Facebook FB $172.83 +0.79% $115.05 +50.22%
    PayPal PYPL $71.20 +0.32% $39.47 +80.39%
    Twitter TWTR $20.77 +1.81% $16.30 +27.42%
    Visa V $108.58 +1.07% $78.02 +39.16%
    VMware VMW $114.54 -0.48% $78.73 +45.48%

    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) rose 0.2%.
    The EUR fell 0.3% to USD 1.1826.
    Britain’s GBP fell 0.3% to USD 1.3446.
    Japan’s JPY fell 0.1% to 112.57/USD.
    Bloomberg

    AUD

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

    Oil and Gas Futures

    Futures prices

    Oil rose, supported by strong demand, expectations of a drop in U.S. crude inventories and an OPEC-led deal to extend oil output cuts. U.S. crude rose 0.38% to $57.69/barrel and Brent was last at $62.94, up 0.78 percent on the day.Reuters

    Prices are as at 15:49 ET

    • NYMEX West Texas Intermediate (WTI): $57.61/barrel +0.24% Chart
    • ICE (London) Brent North Sea Crude: $62.87/barrel +0.67% Chart
    • NYMEX Natural gas futures: $2.91/MMBTU -2.55% Chart

    flag_australia AU: CBA Services PMI. Nov 2017

    Press Release Extract [ser_au_psi]

    Services PMI Nov 2017:

    PMI Nov 17: 54.0 Expansion, faster rate of growth
    PMI Oct 17: 53.0 Expansion

    au_psi_20171205

    Activity growth quickened for the first time since June in November. New orders continued to rise solidly, encouraging businesses to expand their workforces. Nonetheless, capacity pressures continued to rise. Job creation drove operating costs higher, with panellists citing salaries and wages as a key source of input price inflation. At the same time, charges were raised amid reports of the pass through of greater cost burdens to clients.

    The seasonally adjusted Business Activity Index increased in November to 54.0, from 53.0 in October. This signalled a solid pace of expansion, and the first time since June that activity growth has quickened from the prior month.

    According to anecdotal evidence, service sector output growth was underpinned by higher demand from both new and existing customers. Incoming new business increased solidly and at a fractionally faster pace. Firms suggested that successful marketing campaigns and new
    customer wins had spurred new order growth.

    In turn, higher demand led to capacity pressures among Australian service providers in November. That said, an accelerated pace of jobs growth coincided with the softest rate of backlog accumulation since August. Panellists indicated that additional staff had been hired in line with greater order book volumes and business growth.

    With employment levels rising, alongside greater staff salaries and wages, latest data signalled an increase in operating expenses. Although input price inflation eased for the fourth month in succession in November, it remained sharp overall. Some panellists also noted that the implementation of the container deposit scheme had led to higher input costs.

    The combination of rising cost burdens and robust demand conditions encouraged firms to increase their selling prices. That said, in line with easing input price inflation, the extent to which average charges were raised softened in November.

    Australian service providers retained a high degree of optimism in November. Business confidence was linked to planned new marketing strategies, forecasts of business growth and new contract wins.

    Composite PMI Nov 2017:

    PMI Nov 17: 54.3 Expansion, faster rate of growth
    PMI Oct 17: 53.1 Expansion

    au_pmi_composite_20171205

    The seasonally adjusted Commonwealth Bank Composite Output Index increased in November for the first time since June, to signal a quickened pace of private sector activity expansion. The upturn was broad-based, with both the manufacturing and service sectors posting accelerated rates of growth.

    Commenting on the Services and Composite PMI data, CBA’s Senior Economist, Gareth Aird, said:
    ‘The strongest reading on the services sector since August is a welcome result. Encouragingly, the pace of job creation has quickened over the past month which indicates that firms expect growth in the demand for services to lift heading into the new year. Interestingly, firms have cited higher wages as putting upward pressure on input costs. We may be starting to see some tentative signs that a gradually tightening labour market is putting some much desired upward pressure on wages.’

    Commonwealth Bank of Australia, “CBA Services PMI. Nov 2017“, 5 Dec 2017 More

    flag_australia AU: Balance of Payments and International Investment Position. Sep 2017

    Press Release Extract [ser_au_abs1]

    Current account deficit decreases to $9.1 billion

    The seasonally adjusted current account deficit fell $539 million to $9,125 million in the September quarter 2017.

    In seasonally adjusted terms, the balance on goods and services surplus in the September quarter 2017 was $3,056 million. Exports of goods and services fell $154 million and imports of goods and services rose $222 million. The fall in the net primary income of $1,044 million to $11,968m was the main contributor to the narrowing of the current account deficit in the September quarter 2017.

    In volume terms, exports and imports grew at the same pace this quarter, and as a result international trade is expected to make no contribution to growth in the September quarter 2017 Gross Domestic Product. In seasonally adjusted chain volume terms, the balance on goods and services deficit increased $145 million to a deficit of $9,737 million.

    Australia’s net international investment position was a liability of $958.8 billion at 30 September 2017, an increase of $13.2 billion (1 per cent) on the revised 30 June 2017 position of $945.7 billion.

    Australia’s net foreign debt liability increased $26.0 billion (3 per cent) to $989.7 billion. Australia’s net foreign equity asset increased $12.8 billion (71 per cent) to $30.8 billion at 30 September 2017.

    Australian Bureau of Statistics, “5302.0 – Balance of Payments and International Investment Position, Australia, Sep 2017“, 5 Dec 2017 More Detail

    flag_australia AU: Retail Trade. Oct 2017

    Press Release Extract [ser_au_abs2]

    Retail turnover rises 0.5 per cent in October

    Australian retail turnover rose 0.5 per cent in October 2017, seasonally adjusted, according to the latest Australian Bureau of Statistics (ABS) Retail Trade figures.

    This follows a 0.1 per cent rise in September 2017.

    “In seasonally adjusted terms, there were rises across all industries led by cafes, restaurants and takeaway food services (1.7 per cent),” the Director of the Quarterly Economy Wide Survey, Ben James, said.

    There were also rises for food retailing (0.3 per cent), clothing, footwear and personal accessory retailing (1.0 per cent), other retailing (0.3 per cent), department stores (0.5 per cent) and household goods retailing (0.1 per cent) in October 2017.

    In seasonally adjusted terms, all states rose. There were rises in Victoria (1.0 per cent), New South Wales (0.3 per cent), South Australia (1.2 per cent), Western Australia (0.5 per cent), Queensland (0.1 per cent), the Northern Territory (1.7 per cent), the Australian Capital Territory (0.6 per cent) and Tasmania (0.5 per cent).

    The trend estimate for Australian retail turnover fell 0.1 per cent in October 2017 following a relatively unchanged estimate (0.0 per cent) in September 2017. Compared to October 2016 the trend estimate rose 1.8 per cent.

    Online retail turnover contributed 4.7 per cent to total retail turnover in original terms.

    Australian Bureau of Statistics, “8501.0 – Retail Trade, Australia, Oct 2017“, 5 Dec 2017 More Detail

    flag_australia AU: RBA Monetary Policy (OCR) Decision

    Press Release Extract [ser_au_rba]

    At its meeting today, the Board decided to leave the cash rate unchanged at 1.50 per cent.

    Conditions in the global economy have improved over 2017. Labour markets have tightened and further above-trend growth is expected in a number of advanced economies, although uncertainties remain. Growth in the Chinese economy continues to be supported by increased spending on infrastructure and property construction, although financial conditions have tightened somewhat as the authorities address the medium-term risks from high debt levels. Australia’s terms of trade are expected to decline in the period ahead but remain at relatively high levels.

    Wage growth remains low in most countries, as does core inflation. In a number of economies there has been some withdrawal of monetary stimulus, although financial conditions remain quite expansionary. Equity markets have been strong, credit spreads have narrowed over the course of the year and volatility in financial markets is low. Long-term bond yields remain low, notwithstanding the improvement in the global economy.

    Recent data suggest that the Australian economy grew at around its trend rate over the year to the September quarter. The central forecast is for GDP growth to average around 3 per cent over the next few years. Business conditions are positive and capacity utilisation has increased. The outlook for non-mining business investment has improved further, with the forward-looking indicators being more positive than they have been for some time. Increased public infrastructure investment is also supporting the economy. One continuing source of uncertainty is the outlook for household consumption. Household incomes are growing slowly and debt levels are high.

    Employment growth has been strong over 2017 and the unemployment rate has declined. Employment has been rising in all states and has been accompanied by a rise in labour force participation. The various forward-looking indicators continue to point to solid growth in employment over the period ahead. There are reports that some employers are finding it more difficult to hire workers with the necessary skills. However, wage growth remains low. This is likely to continue for a while yet, although the stronger conditions in the labour market should see some lift in wage growth over time.

    Inflation remains low, with both CPI and underlying inflation running a little below 2 per cent. The Bank’s central forecast remains for inflation to pick up gradually as the economy strengthens.

    The Australian dollar remains within the range that it has been in over the past two years. An appreciating exchange rate would be expected to result in a slower pick-up in economic activity and inflation than currently forecast.

    Growth in housing debt has been outpacing the slow growth in household income for some time. To address the medium-term risks associated with high and rising household indebtedness, APRA has introduced a number of supervisory measures. Credit standards have been tightened in a way that has reduced the risk profile of borrowers. Nationwide measures of housing prices are little changed over the past six months, with conditions having eased in Sydney. In the eastern capital cities, a considerable additional supply of apartments is scheduled to come on stream over the next couple of years. Rent increases remain low in most cities.

    The low level of interest rates is continuing to support the Australian economy. Taking account of the available information, the Board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time.

    Reserve Bank of Australia, “Statement by Philip Lowe, Governor: Monetary Policy Decision“, 5 Dec 2017 Statement

    flag_europe EU: Eurozone Composite PMI. Nov 2017

    Press Release Extract [ser_eu_psi]

    Key findings:

    • Final Eurozone Composite Output Index: 57.5 (Flash: 57.5, October Final: 56.0)
    • Final Eurozone Services Business Activity Index: 56.2 (Flash: 56.2, October Final: 55.0)

    eu_psi_composite_20171205

    The rate of euro area economic expansion moved up a gear in November. Output growth accelerated to the fastest in over six-and-a-half years, while rates of increase for all of the main survey indicators covering demand, employment and inflation also hit multi-year highs.

    The final IHS Markit Eurozone PMI® Composite Output Index posted 57.5 in November, up from 56.0 in October and unchanged from the earlier flash estimate. The headline index has signalled expansion in each of the past 53 months.

    Growth was again led by a resurgent manufacturing sector. Manufacturing production rose at the quickest pace in almost seven years in November and the headline index from the manufacturing survey – the Manufacturing PMI – posted a level bettered only once in its 20-year history.

    The eurozone service sector also registered quicker output growth in November. Business activity rose to one of the greatest extents seen over the past six-and-a-half years.

    The acceleration in the pace of economic expansion was broad-based across the countries covered, with pick-ups signalled in the ‘big-four’ nations and Ireland. France stayed at the top of the growth rankings for the second month, with its rate of increase hitting a six-and-a-half year record.

    Ireland was in second position, with growth at a three-month high. Rates of expansion hit two-month highs in Germany and Spain, and a four-month high in Italy.

    Inflows of new orders improved at the quickest pace since February 2011. This was led by near-record growth of manufacturing new work, including an unprecedented rise in new export orders.

    Strengthening demand led to increased backlogs of work, encouraging firms to raise employment. Job creation hit a 17-year peak, with faster increases signalled in Germany, France, Spain and Ireland.

    Price pressures intensified in November, with inflation of both input costs and output charges at or near to six-and-a-half year highs. Both price measures were substantially higher in the manufacturing sector than at service providers.

    Services

    The eurozone service economy continued to make solid progress in November. Business activity growth accelerated to a six-month high, as companies raised output in response to increased new order inflows and backlogs of work.

    At 56.2 in November, up from 55.0 in October, the final IHS Markit Eurozone PMI® Services Business Activity Index indicated an increase in output for the fifty-second successive month. The final index posting was unchanged from the earlier flash estimate.

    The pace of increase in new business continued to hold steady at September’s six-month high. This tested capacity – backlogs of work rose at the quickest pace since March 2011 – and encouraged further job creation. Employment increased to the greatest extent in just over ten years.

    France saw the strongest output growth among the nations covered by the survey. Rates of expansion for services business activity and new work were the best registered for six-and-a-half years, leading to the steepest job creation since July 2001.

    Italy also saw output and new order growth accelerate during November, to three-month highs in both cases. The pace of increase in employment also improved slightly.

    The other nations covered by the survey saw slower rates of expansion in business activity and new work received. Output growth slipped to a three-month in Germany, a ten-month low in Spain and a 12-month low in Ireland. Rates of job creation also moderated in Germany and Ireland, in contrast to stronger growth in Spain.

    Input cost inflation rose to a nine-month high, as faster increases in Italy, France and Spain offset decelerations in Germany and Ireland. Meanwhile, output charge inflation across the euro area service sector held steady at October’s seven-month high. Increased output prices were registered in almost all of the nations covered, the exception being Italy.

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

    ‘The eurozone enjoyed a bumper November, setting the scene for a buoyant end to the year. The PMI surveys signalled faster growth across the board, led by stronger expansions in France and Germany alongside a marked upturn in the pace of growth in Italy. Business conditions in Spain also remained encouragingly resilient in the face of heightened political uncertainty, albeit on course for the weakest quarter of the year.

    Comparisons with GDP indicate that the survey data for the fourth quarter so far are consistent with the eurozone expanding by 0.8%, with growth rates of 0.9% and 0.7% signalled for Germany and France respectively. Spain looks set for a 0.75% expansion while Italy could see GDP rise by 0.4-0.5%.

    The survey data therefore suggest that business as a whole in the eurozone has so far been largely unaffected by political uncertainty in many countries, notably Germany and Spain, once again defying widespread expectations that growth would slow as uncertainty leads to more risk averse decision making. So far, the strengthening of the euro also shows no discernible impact on exports.

    Heading into 2018 the big questions will be how long this growth spurt can be sustained, and whether price pressures will rise. Given the strength of order book growth and hiring, as well as the elevated level of business optimism, the eurozone should start the New Year on a solid footing. If survey data remain buoyant in December, expect to see 2018 growth forecasts revised higher. In terms of prices, core inflation has so far remained subdued, but the PMI price gauges and indicators of depleted capacity suggest that inflationary pressures will pick up next year.’

    IHS Markit, “IHS Markit Eurozone Composite PMI® – final data – Includes IHS Markit Eurozone Services PMI®“, 5 Dec 2017 More

    flag_europe EU: Retail Trade. Oct 2017

    Press Release Extract [ser_eu_retail]

    In October 2017 compared with September 2017, the seasonally adjusted volume of retail trade decreased by 1.1% in the euro area (EA19) and by 0.5% in the EU28, according to estimates from Eurostat. In September, the retail trade volume rose by 0.8% in the euro area and by 0.2% in the EU28.

    eu_retail_20171205

    In October 2017 compared with October 2016, the calendar adjusted retail sales index increased by 0.4% in the euro area and by 0.9% in the EU28.

    Monthly comparison by retail sector and by Member State

    The 1.1% decrease in the volume of retail trade in the euro area in October 2017, compared with September 2017, is due to falls of 1.3% for “Food, drinks and tobacco”, of 1.1% for non-food products and of 0.1% for automotive fuel. In the EU28, the 0.5% decrease in the volume of retail trade is due to falls of 0.9% for “Food, drinks and tobacco” and of 0.8% for non-food products, while automotive fuel remained stable.

    Among Member States for which data are available, the largest decreases in the total retail trade volume were registered in Luxembourg (-5.3%), Portugal (-2.3%) and Austria (-1.9%), while the highest increases were observed in Romania (+1.0%), the United Kingdom (+0.9%), Poland and Slovakia (both+0.6%).

    Annual comparison by retail sector and by Member State

    The 0.4% increase in the volume of retail trade in the euro area in October 2017, compared with October 2016, is due to rises of 0.6% for non-food products, of 0.3% for automotive fuel and of 0.2% for “Food, drinks and tobacco”.

    In the EU28, the 0.9% increase in retail trade volume is due to rises of 1.5% for non-food products, of 0.8% for automotive fuel and of 0.1% for “Food, drinks and tobacco”.

    Among Member States for which data are available, the highest increases in the total retail trade volume were registered in Romania (+12.6%), Poland (+7.1%), Ireland, Hungary and Malta (all +6.3%), while the largest decreases were observed in Luxembourg (-27.0%), Austria (-2.2%) and Belgium (-2.1%).

    Eurostat, “October 2017 compared with September 2017: Volume of retail trade down by 1.1% in euro area, Down by 0.5% in EU28“, 5 Dec 2017 More

    flag_usa US: International Trade in Goods and Services. Oct 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 $48.7 billion in October, up $3.8 billion from $44.9 billion in September, revised. October exports were $195.9 billion, down less than $0.1 billion from September exports. October imports were $244.6 billion, $3.8 billion more than September imports.

    The October increase in the goods and services deficit reflected an increase in the goods deficit of $3.8 billion to $69.1 billion and a decrease in the services surplus of less than $0.1 billion to $20.3 billion.

    Year-to-date, the goods and services deficit increased $49.1 billion, or 11.9 percent, from the same period in 2016. Exports increased $97.5 billion or 5.3 percent. Imports increased $146.6 billion or 6.5 percent.

    Goods and Services Three-Month Moving Averages

    The average goods and services deficit increased $1.2 billion to $46.0 billion for the three months ending in October.

    • Average exports of goods and services increased $0.8 billion to $195.2 billion in October.
    • Average imports of goods and services increased $2.0 billion to $241.2 billion in October.

    Year-over-year, the average goods and services deficit increased $5.1 billion from the three months ending in October 2016.

    • Average exports of goods and services increased $8.2 billion from October 2016.
    • Average imports of goods and services increased $13.2 billion from October 2016.

    Exports

    Exports of goods decreased $0.3 billion to $130.3 billion in October.

    Exports of goods on a Census basis decreased $0.5 billion.

    • Foods, feeds, and beverages decreased $1.3 billion.
      o Soybeans decreased $1.4 billion.
    • Capital goods decreased $1.2 billion.
      o Civilian aircraft decreased $1.1 billion.
    • Industrial supplies and materials increased $2.6 billion.

    Net balance of payments adjustments increased $0.2 billion.

    Exports of services increased $0.3 billion to $65.6 billion in October.

    • Financial services increased $0.1 billion.
    • Other business services, which includes research and development services; professional and management services; and technical, trade-related, and other services, increased $0.1 billion.

    Imports

    Imports of goods increased $3.5 billion to $199.4 billion in October.

    Imports of goods on a Census basis increased $3.5 billion.

    • Industrial supplies and materials increased $1.8 billion.
      o Crude oil increased $1.5 billion.
    • Other goods increased $1.1 billion.
    • Consumer goods increased $0.8 billion.
      o Cell phones and other household goods increased $0.3 billion.

    Net balance of payments adjustments decreased less than $0.1 billion.

    Imports of services increased $0.3 billion to $45.2 billion in October.

    • Transport increased $0.3 billion.

    Goods by Selected Countries and Areas: Monthly – Census Basis

    The October figures show surpluses, in billions of dollars, with South and Central America ($3.9), Hong Kong ($2.3), Brazil ($1.1), Singapore ($0.7), Saudi Arabia ($0.3), and United Kingdom ($0.2). Deficits were recorded, in billions of dollars, with China ($31.9), European Union ($12.0), Mexico ($6.0), Japan ($5.9), Germany ($5.3), Italy ($2.7), South Korea ($2.7), India ($2.1), Canada ($1.9), OPEC ($1.6), France ($1.6), and Taiwan ($1.6).

    • The balance with members of OPEC shifted from a surplus of $0.6 billion to a deficit of $1.6 billion in October. Exports decreased $0.9 billion to $4.3 billion and imports increased $1.3 billion to $5.9 billion.
    • The deficit with China increased $2.1 billion to $31.9 billion in October. Exports decreased $0.8 billion to $10.6 billion and imports increased $1.2 billion to $42.5 billion.
    • The deficit with the European Union decreased $2.5 billion to $12.0 billion in October. Exports increased $1.4 billion to $25.0 billion and imports decreased $1.1 billion to $37.0 billion.

    Goods and Services by Selected Countries and Areas: Quarterly – Balance of Payments Basis

    The third quarter figures show surpluses, in billions of dollars, with South and Central America ($18.3), Hong Kong ($8.4), Brazil ($7.1), Singapore ($5.0), OPEC ($4.9), Canada ($4.3), United Kingdom ($3.7), and Saudi Arabia ($3.5). Deficits were recorded, in billions of dollars, with China ($81.9), European Union ($25.5), Germany ($17.2), Mexico ($15.9), Japan ($14.6), Italy ($8.7), India ($7.4), Taiwan ($4.2), South Korea ($3.5), and France ($3.2).

    • The balance with Canada shifted from a deficit of $0.7 billion to a surplus of $4.3 billion in the third quarter. Exports increased $1.0 billion to $85.5 billion and imports decreased $4.0 billion to $81.2 billion.
    • The deficit with Mexico decreased $2.6 billion to $15.9 billion in the third quarter. Exports increased $1.3 billion to $69.2 billion and imports decreased $1.3 billion to $85.2 billion.
    • The deficit with South Korea increased $2.2 billion to $3.5 billion in the third quarter. Exports decreased $1.5 billion to $17.3 billion and imports increased $0.7 billion to $20.8 billion.

    U.S. Census Bureau and Bureau of Economic Analysis, “US International Trade in Goods and Services, Oct 2017“, 5 Dec 2017 (08:30) More

    flag_usa US: Services PSI. Nov 2017

    Press Release Extract [ser_us_psi]

    Key findings:

    • Service sector output expansion softens to five month low
    • Upturn in new business accelerates
    • Business confidence slips to joint-weakest since February

    us_psi_composite_20171205

    November survey data signalled a slower rate of expansion in business activity across the US service sector. Although output growth eased slightly to a five-month low, the upturn in new business accelerated and was solid overall. Employment growth meanwhile reached a three-month peak, which helped alleviate capacity pressures. In line with this, backlog accumulation softened to a five-month low. Inflationary pressures intensified with both input prices and output charges rising at quicker paces. The latest survey also indicated a fall in business confidence to the joint-lowest since February.

    The seasonally adjusted IHS Markit U.S. Services Business Activity Index registered 54.5 in November, down from 55.3 in October. Although the latest index reading indicated a slightly weaker output expansion, the overall rate of growth was strong by recent standards nonetheless. Anecdotal evidence suggested that increases in activity were due to greater new order volumes and robust client demand.

    New orders received by service providers continued to rise in November, with the pace of expansion accelerating from October’s six-month low. Panellists attributed the improvement in new orders to more favourable demand conditions and the acquisition of new clients.

    Alongside an increase in new orders, firms reported that greater business requirements had led to employment growth. Job creation accelerated slightly to a solid rate that was the fastest in three months. Moreover, the latest upturn in payroll numbers was above the long-run series average.

    Capacity pressures softened for the fourth successive month, and the overall accumulation of unfinished business was only fractional. Furthermore, the growth in outstanding business was the weakest since June.

    Average prices charged for services increased further in November, with the rate of inflation accelerating. Panellists stated the rise was due to higher input costs which were passed on to clients. Cost burdens faced by service providers rose at a strong rate that was slightly below the series trend. Panel members noted that the increase in input costs was primarily due to higher goods prices.

    Business confidence among service providers was robust in November, despite slipping to the joint lowest
    since February. Where optimism was reported, firms linked this to planned investment and greater current new order volumes.

    IHS Markit Final U.S. Composite PMI™ The final seasonally adjusted IHS Markit U.S. Composite PMI™ Output Index fell to 54.5 in November, down from 55.2 in October. Softer upturns in both the manufacturing and service sector led to a weaker overall output expansion.

    Moreover, the latest composite index figure indicated the slowest growth in private sector activity since June.

    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 slowest growth of service sector business activity since June, alongside a slight dip in the pace of manufacturing expansion, means the November PMI surveys registered a modest cooling in the overall rate of business growth. Mid-way through the fourth quarter, the surveys are still pointing to a reasonable GDP growth rate of approximately 2.5%.

    The surveys’ employment indices are meanwhile pointing to solid non-farm payroll growth of circa 200,000 as companies continue to take on staff in encouraging numbers to meet rising order books.

    Disappointingly, optimism about the year ahead deteriorated as companies grew increasingly cautious about the outlook for 2018, suggesting risk aversion may start to rise, which could hit hiring and investment. However, for now, businesses generally remain in expansion mode and the upturn shows few signs of losing momentum to any significant extent.

    In terms of prices, the upturn continues to show signs of gradually feeding through to higher inflationary pressure. Average selling prices for goods and services showed one of the largest increases recorded over the past four years, linked to rising cost pressures.’

    IHS Markit, “IHS Markit U.S. Services PMI™ – final data (with composite PMI™)“, 5 Dec 2017 (09:45) More

    Global: J.P.Morgan Global Services PMI. Nov 2017

    Press Release Extract [ser_global_psi]

    Global services output expands for hundredth successive month

    • Output/Activity: Nov 2017: 53.7, Oct 2017 54.1
    • New Business: Nov 2017: 54.5, Oct 2017: 54.1
    • Backlogs of Work: Nov 2017: 50.9, Oct 2017: 50.9
    • Input Prices: Nov 2017: 55.4, Oct 2017: 54.7
    • Output Charges: Nov 2017: 52.8, Oct 2017: 51.6
    • Employment: Nov 2017: 52.7, Oct 2017: 52.7
    • Future Activity: Nov 2017: 63.4, Oct 2017: 64.4

    The rate of expansion in global service sector business activity eased to a four-month low in November, as growth slowed in the US, Japan and the UK. Moreover, contractions were recorded in India and Brazil. Brighter spots were the euro area, China, Russia and Australia which all saw output increase at faster rates.

    The J.P.Morgan Global Services Business Activity Index posted 53.7 in November, down from 54.1 in October. The headline index has now remained above the neutral 50.0 mark for 100 consecutive months, although the latest reading was slightly below its long-run average.

    global_psi_20171205

    Sector data pointed to a broad-based increase in output, with growth registered across the business, consumer and financial services categories. The steepest rate of expansion was at financial service providers. The slowest was in the consumer service sector, despite this being the only category to see a faster increase than in October.

    global_psi_sectors_20171205

    The outlook for the world service sector remained broadly positive in November. Inflows of new work strengthened, with the pace of increase improving on October’s six-month low. Although business optimism eased to the lowest in a year, service providers still expect (on average) output to rise over the coming 12 months.

    The continued upturn of new order intakes tested capacity during November. Backlogs of work rose for the sixteenth successive month. The rate of expansion was unchanged from October and broadly consistent with the average for the current sequence of increase.

    Global service sector employment rose again during November. Staffing levels increased in almost all of the nations covered by the survey, the exception being Brazil. The US, the eurozone, China, Australia and Russia all saw faster jobs growth.

    Upward price pressures intensified in November, with inflation of input costs and output charges accelerating. Rates of increase in both price measures remained higher (on average) in developed nations compared to emerging markets.

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

    ‘Global service sector activity continued to expand at a solid and steady pace in November, underpinned by rising new order intakes. Capacity is still being tested, despite rising employment. This is feeding into pipeline inflationary pressures at service providers, with both input costs and output charges rising at faster rates during the latest month.’

    J.P.Morgan and IHS Markit in association with ISM and IFPSM, “J.P.Morgan Global Services PMI™. Nov 2017“, 5 Dec 2017 (11:00) More

    Global: J.P.Morgan Global Manufacturing & Services PMI™. Nov 2017

    Press Release Extract [ser_global_composite_pmi]

    Global growth holds steady at two-and-a-half year high

    • Output: Nov 2017: 54.0, Oct 2017: 54.0
    • New Orders: Nov 2017: 54.7, Oct 2017: 54.1
    • Employment: Nov 2017: 52.7, Oct 2017: 52.7
    • Input Prices: Nov 2017: 57.3, Oct 2017: 56.6
    • Output Charges: Nov 2017: 53.2, Oct 2017: 52.2
    • Backlogs: Nov 2017: 51.5, Oct 2017: 51.4
    • Future Output: Nov 2017: 63.3, Oct 2017: 63.9

    global_pmi_composite_20171205

    November saw the rate of expansion in global economic output remain at its joint-highest over the past two-and-a-half years. The outlook also remained positive, with new business intakes rising at the strongest pace since September 2014 and backlogs of work increasing to the greatest extent in four years.

    The J.P.Morgan Global All-Industry Output Index posted 54.0 in November, to remain above the neutral 50.0 mark for the sixty-second successive month. The rate of expansion was solid and slightly above its long-run average.

    November saw an upswing in the rate of increase in manufacturing production, which rose to the greatest extent since February 2011. Service sector business activity also rose at a solid clip, albeit the weakest in four months.

    Growth at service providers was again led by the financial and business categories, while increases in manufacturing output were strongest in the intermediate and investment goods sectors. The consumer category was the weakest performer in both the services and manufacturing industries.

    National PMI data indicated that the euro area remained a prime growth engine for the global economy in November. Output across the eurozone expanded at the quickest pace in over six-and-a-half years, with accelerations seen across each of the currency union’s ‘big-four’ economies (Germany, France, Italy and Spain).

    Rates of expansion also improved in China, Russia and Australia, but slowed in the US, Japan, the UK and India. Brazil was the only major nation to signal a contraction in economic activity, as ongoing weakness in services more than offset a strong growth acceleration at manufacturers.

    Inflows of new business rose at the fastest pace in over three years in the world economy. The solid trend in new orders tested capacity and contributed to further accumulation of backlogs of work. This encouraged job creation, with the rate of expansion equalling October’s near six-and-a-half-year high.

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

    ‘November saw the global economy maintain a robust and steady rate of output expansion, as a solid upswing in growth of manufacturing production offset a slightly weaker upturn in service sector activity. The outlook for global growth also remains positive, as manufacturing looks set to sustain its recent bounce and rising order intakes boost service providers.’

    J.P.Morgan and IHS Markit in association with ISM and IFPSM, “J.P.Morgan Global Manufacturing & Services PMI™. Nov 2017“, 5 Dec 2017 (11:00) More

    flag_usa US: ===

    Press Release Extract [ser_**]

    ===

    ===, “===“, 5 Dec 2017 More

    flag_japan Japan update

    Nikkei Japan Services PMI. Nov 2017

    Key points:

    • Business activity growth weakens
    • Incoming new business increases at historically marked pace
    • Input price inflation accelerates

    jp_psi_20171205

    Growth in Japanese service sector activity was sustained for a fourteenth successive month during November, albeit at a weaker rate. New business continued to expand at a relatively strong pace, while payroll numbers were broadly unchanged. Companies retained a positive outlook, as confidence regarding future activity increased to a six-month high. On the price front, input cost inflation accelerated. As a result, output prices were raised, albeit moderately.

    The headline index from the survey – the seasonally adjusted Business Activity Index – edged lower in November to 51.2, from October’s 26-month high of 53.4. Activity growth has now been recorded in each of the past 14 months. That said, the rate of growth signalled was below the average seen across the current expansionary sequence.

    Conversely, manufacturing output growth accelerated to a 45-month high. In aggregate, this saw the Nikkei Composite Output Index decrease to 52.2 in November, from 53.4 in October.

    Despite softer growth in service sector activity, new orders increased at a strong pace relative to historical data. Anecdotal evidence indicated that new customer wins had increased incoming new business.

    Similarly, robust demand conditions were seen in the manufacturing sector. New orders increased at the quickest pace in 44 months.

    Meanwhile, service providers attributed higher levels of outstanding business to greater order book volumes. Backlogs of work rose for a twelfth month in succession during November, although the rate of accumulation eased since October to the weakest since February.

    Weaker capacity pressures coincided with a stabilisation in workforce numbers. Latest survey data signalled that employment was broadly unchanged in November. While some survey respondents hired additional staff in line with greater sales, others allowed the headcount to decline amid retirements.

    In the manufacturing sector, the rate of jobs growth was solid, rising to a six-month high in line with greater order book volumes.

    Japanese service sector firms were faced with intensifying cost pressures in November. Input price inflation accelerated for the fourth month in succession to the joint-sharpest since August 2008, on a par with September of that year. Panel members cited higher labour expenses as a key driver behind greater cost burdens.

    Higher input prices and strong demand encouraged firms to raise output charges, albeit moderately. Although moderate, the rate of inflation quickened to a 28-month high.

    Japanese manufacturers also raised selling prices amid solid sales growth. Nonetheless, profit margins were squeezed further as input price inflation quickened to a 35-month high.

    Lastly, Japanese service providers retained an upbeat outlook towards the coming 12 months. In fact, the degree of optimism strengthened to a six-month high. Panellists anticipating output growth over the coming year generally associated this with upcoming new projects and planned company expansions.

    Commenting on the Japanese Services PMI survey data, Joe Hayes, Economist at IHS Markit, which compiles the survey, said: ‘Growth of activity in the Japanese service sector appeared to lose momentum slightly in November, following October’s 26-month high. Nonetheless, the expansionary trend which has been apparent since October 2016 was maintained. Weaker activity growth did not coincide with a slowdown in demand however. Relative to historical data, incoming new business increased at a marked rate. Concurrently, businesses remained optimistic that activity would rise in the future, as confidence strengthened to a six-month high. In turn, firms raised selling prices to the highest degree in 28 months. To the downside, input price inflation quickened to the sharpest rate in over nine years, while employment stagnated.’

    IHS Markit, “Nikkei Japan Services PMI® (with Composite PMI data)“, 5 Dec 2017 More

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    flag_china China update

    Caixin General Services PMI. Nov 2017

    Key points:

    • Modest increases in output across both the manufacturing and service sectors
    • Upturn in services employment offsets further job cuts at goods producers
    • Stronger business confidence at service providers contrasts with reduced optimism among manufacturers

    cn_psi_20171205

    The Caixin China Composite PMI™ data (which covers both manufacturing and services) indicated that growth momentum improved slightly in November. Although the Composite Output Index rose from October’s 16-month low of 51.0 to 51.6, the latest figure pointed to only a modest upturn in business activity that remained weaker than the series average.

    Data broken down by sector indicated that business activity growth improved across both the manufacturing and service sectors during November. In the manufacturing sector, the pace of increase picked up from October’s four-month low, but remained moderate overall.

    Services companies meanwhile saw the quickest rise in activity for three months, though growth was likewise modest. The latter was illustrated by the seasonally adjusted Caixin China General Services Business Activity Index increasing from 51.2 to 51.9 in November. Services companies signalled a sustained rise in new work during November. As was the case for activity, the rate of expansion improved to a three-month record, with a number of firms indicating that new client wins and promotional activities had helped to lift overall sales. New business also increased at manufacturers, though the rate of expansion softened since October. At the composite level, growth in new orders edged up to its strongest since August.

    Greater operational requirements contributed to a further rise in service sector staff numbers midway through the final quarter of 2017. Though modest, the rate of job creation was the quickest seen since August. In contrast, manufacturing firms continued to register lower workforce numbers, with the rate of reduction the most marked in three months. Staff hiring at services companies offset another fall in manufacturing payroll numbers, so that employment remained stagnant at the composite level.

    Higher service sector employment helped firms to reduce their levels of work-in-hand during November. That said, the rate of depletion was similar to those seen in the prior two months and marginal. Meanwhile, goods producers noted a further marked rise in unfinished workloads, despite the rate of accumulation easing since October. This, in turn, led to another modest upturn in outstanding business at the composite level in November.

    Rates of cost inflation remained markedly different between manufacturing and services companies. Input prices faced by service providers rose only modestly during November. At the same time, cost burdens rose sharply across the manufacturing sector, despite the rate of inflation edging down to a three-month low. Higher raw material costs were commonly cited as a key factor driving up input costs. As a result, composite input prices continued to rise markedly in the latest survey period.

    In line with the trend for input costs, services companies raised their prices charged at a modest pace in November. Nonetheless, the rate of increase was the quickest seen since July 2015. Manufacturers meanwhile raised their factory gate prices at a solid rate, with a number of surveyed firms mentioning the pass through of greater input costs to clients. Overall, composite output charges rose at a moderate pace that was slightly faster than that seen in October.

    Strengthening optimism towards the 12-month business outlook at services companies was offset by reduced positive sentiment at manufacturers in November. Furthermore, the degree of confidence across the manufacturing sector was the joint-weakest recorded since the series began in April 2012. Consequently, total business optimism declined to its weakest since December 2015.

    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 rebounded for the second straight month in November to 51.9, 0.7 points higher than in October. New business expanded at a rapid pace while input costs and prices charged continued to rise. Mainly driven by the strong reading in the service sector, the headline Caixin China Composite PMI came in at 51.6 in November, 0.6 points higher than for the previous month.

    The Caixin PMI readings in November showed the economy has maintained stability and there was no imminent risk of a significant decline in its growth rate. But we should be cautious because the economy may come under rising inflationary pressure at the start of next year due to continued price increases.

    IHS Markit, “Caixin China General Services PMI“, 5 Dec 2017 More

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    And … after work

    Norwegian Jewel docking at Port Melbourne