Eurozone Manufacturing Expansion Strengthens In September

Trading 01 oct 2020 Commentaire »

Euro area manufacturing expanded at a faster rate in September, largely led by the growth in Germany, while rising coronavirus infections pose a threat to the outlook. The seasonally adjusted Eurozone Manufacturing PMI rose to 53.7 in September from 51.7 in August, latest survey data from IHS Markit showed on Thursday, confirming the flash estimate released earlier. A reading above 50 suggests growth in the manufacturing sector. The euro area manufacturing sector has grown for three months in a row and the September growth marked the strongest expansion in over two years. Germany led the improvement in September with the PMI reading hitting a 26-month high of 56.4, slighlty below the flash reading of 56.6.

Italy followed with a 27-month high reading of 53.2. French, Spanish and Austrian manufacturing PMIs hit two-month highs of 51.2, 50.8 and 51.7, respectively. In the Netherlands, manufacturing growth was the strongest in seven months with a PMI reading of 52.5. Manufacturing stagnated in Greece and Ireland. Growth in the investment goods industry was the strongest in over two years. Consumer and intermediate goods categories registered solid improvement in operating conditions in September. Output and new orders grew robustly in September and the pace of growth in both was the strongest in over two-and-a-half years. Export orders grew for a third straight month and the sharpest rate since February 2018. Though backlogs were the highest in nearly two-and-a-half years that did not prevent further job losses. Employment decreased at the slowest rate since February. Purchasing activity increased for the first time in nearly two years. Input costs rose slightly, while output prices fell for the fifteenth month in a row, thanks to competitive pressures and a still fragile demand environment. Business confidence was the highest since April 2018. "Divergent export performance explains much of the difference between national production trends, with Germany the stand-out leader in terms of growth in September, led by a strengthening of demand for investment goods such as plant and machinery," IHS Markit Chief Business Economist Chris Williamson said. "Without a more broad-based recovery, the sustainability of the upturn looks at risk, with additional worries fueled by rising Covid- 19 infection rates," the economist added.


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Treasury Reveals Details Of Auctions Of 3-Year & 10-Year Notes, 30-Year Bonds

Trading 01 oct 2020 Commentaire »

On Thursday, the Treasury Department announced the details of this month's auctions of three-year and ten-year notes and thirty-year bonds.

The Treasury revealed its plans to sell $52 billion worth of three-year notes, $35 billion worth of ten-year notes and $23 billion worth of thirty-year bonds.

The results of the three-year note auction will be announced next Tuesday, the results of the ten-year note auction will be announced next Wednesday and the results of the thirty-year bond auction will be announced next Thursday.

Last month, the Treasury sold $50 billion worth of three-year notes, $35 billion worth of ten-year notes and $23 billion worth of thirty-year bonds.

The three-year and ten-year note auctions attracted below average demand, while demand for the thirty-year bond auction was modestly below average.


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U.S. Construction Spending Jumps Much More Than Expected In August

Trading 01 oct 2020 Commentaire »

With spending on private construction showing a significant increase, the Commerce Department released a report on Thursday showing U.S. construction spending jumped much more than expected in the month of August.

The report said construction spending surged up by 1.4 percent to an annual rate of $1.413 trillion in August after climbing by 0.7 percent to an upwardly revised rate of $1.393 trillion in July.

Economists had expected construction spending to increase by 0.8 percent compared to the 0.1 percent uptick originally reported for the previous month.

"Construction spending for the third quarter is looking much better than it did a month ago, with spending for August coming in much stronger than expected and spending for July (and June) revised higher," said Nancy Vanden Houten, Lead U.S. Economist at Oxford Economics.

She added, "Third quarter real GDP is currently tracking around 32.7% annualized, a bit stronger than our prior forecast, in part because of the stronger construction spending data."

The much bigger than expected increase came as spending on private construction spiked by 1.9 percent to an annual rate of $1.061 trillion in August after jumping by 1.3 percent to an upwardly revised rate of $1.042 trillion in July.

Spending on residential construction soared by 3.7 percent to a rate of $589.4 billion, while spending on non-residential construction rose by 0.3 percent to a rate of $472.0 billion.

Meanwhile, the Commerce Department said spending on public construction inched up by 0.1 percent to an annual rate of $351.4 billion in August after tumbling by 1.2 percent to a revised rate of $350.9 billion in July.

The report said spending on educational construction climbed by 0.6 percent to a rate of $82.6 billion, and spending on highway construction jumped by 1.9 percent to a rate of $100.6 billion.


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U.S. Manufacturing Index Indicates Slightly Slower In September

Trading 01 oct 2020 Commentaire »

Manufacturing activity in the U.S. expanded for the fourth straight month in September, according to a report released by the Institute for Supply Management on Thursday, although the pace of growth unexpectedly slowed modestly.

The ISM said its purchasing managers index edged down to 55.4 in September after rising to 56.0 in August. While a reading above 50 still indicates growth in the manufacturing sector, economists had expected the index to inch up to 56.3.

The unexpected dip by the headline index was partly due to a notably slower pace of growth in new orders, as the new orders index slumped to 60.2 in September after jumping to 67.6 in August.

The production index also fell to 62.0 in September after climbing to 63.3 in August, indicating a slowdown in the pace of growth.

The report said the employment index increased to 49.6 in September from 46.4 in August, although the reading below 50 still indicates a modest contraction in employment in the manufacturing sector.

"Rising production and new orders readings are encouraging, but contractionary employment suggests caution among manufacturers and supplier deliveries dislocations are persisting," said Oren Klachkin, Lead U.S. Economist at Oxford Economics.

He added, "Looking ahead, we still expect manufacturing to continue gradually recovering, but weak demand, enduring supply chain disruptions, weaker energy activity and virus uncertainty will drag on activity, and risks remain heavily tilted to the downside."

On the inflation front, the prices index climbed to 62.8 in September after jumping to 59.5 in August, indicating raw materials prices increased for the fourth consecutive month.

The ISM is scheduled to release a separate report next Monday on activity in the service sector in the month of September.

The association's non-manufacturing index is expected to edge down to 56.0 in September after dipping to 56.9 in August.


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Dollar Little Changed After U.S. Construction Spending, ISM Manufacturing Index

Trading 01 oct 2020 Commentaire »

Following the release of the U.S. construction spending for August and ISM manufacturing index for September at 10:00 am ET Thursday, the greenback changed little against its major rivals.

The greenback was trading at 105.69 against the yen, 0.9182 against the franc, 1.1743 against the euro and 1.2886 against the pound around 10:01 am ET.


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*U.S. Construction Spending Jumps 1.4% In August

Trading 01 oct 2020 Commentaire »

U.S. Construction Spending Jumps 1.4% In August


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*ISM U.S. Manufacturing Index Edges Down To 55.4 In September

Trading 01 oct 2020 Commentaire »

ISM U.S. Manufacturing Index Edges Down To 55.4 In September


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Dollar Mixed Ahead Of ISM Manufacturing, Construction Spending

Trading 01 oct 2020 Commentaire »

The U.S. construction spending for August and ISM manufacturing index for September are due at 10:00 am ET Thursday.

Ahead of the data, the greenback traded mixed against its major rivals. While the currency held steady against the franc, it rebounded against the rest of major rivals.

The greenback was worth 105.70 against the yen, 0.9188 against the franc, 1.1737 against the euro and 1.2875 against the pound as of 9:55 am ET.


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U.S. Personal Income Tumbles Amid Expiration Of Federal Unemployment Benefits

Trading 01 oct 2020 Commentaire »

Reflecting a decrease in unemployment insurance benefits, the Commerce Department released a report on Thursday showing a steep drop in U.S. personal income in the month of August.

The report said personal income tumbled by 2.7 percent in August after rising by an upwardly revised 0.5 percent in July.

Economists had expected personal income to slump by 2.5 percent compared to the 0.4 percent increase originally reported for the previous month.

Disposable personal income, or personal income less personal current taxes, also plunged by 3.2 percent in August after inching up by 0.3 percent in July.

The Commerce Department said the sharp pullback in personal income partly reflected the expiration of the Federal Pandemic Unemployment Compensation program, which provided a temporary weekly supplemental payment of $600 for those receiving unemployment benefits.

The decrease in unemployment insurance benefits was partly offset by an increase in compensation, with temporary and intermittent Census workers boosting government wages and salaries by $10.8 billion in August.

Meanwhile, the report said personal spending climbed by 1.0 percent in August after jumping by a downwardly revised 1.5 percent in July.

Personal spending was expected to increase by 0.8 percent compared to the 1.9 percent spike originally reported for the previous month.

Excluding price changes, personal spending rose by 0.7 percent in August after increasing by 1.1 percent in July.

The Commerce Department said a jump in spending for services was partly offset by a decrease in spending for goods.

Reflecting the plunge in income and the increase in spending, personal saving as a percentage of disposable personal income slumped to 14.1 percent in August from 17.7 percent in July.

"With compensation growing at a slower pace and government transfers diminishing, consumers dipped into their savings to finance their outlays - this is not a sustainable reality," said Gregory Daco, Chief U.S. Economist at Oxford Economics.

He added, "Unless employment growth picks up, or additional fiscal aid is extended, consumer spending is at risk of slowing dramatically during the second phase of the recovery."


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U.S. Jobless Claims Drop More Than Expected To Six-Month Low

Trading 01 oct 2020 Commentaire »

First-time claims for U.S. unemployment benefits declined by more than expected in the week ended September 26th, according to a report released by the Labor Department on Thursday.

The report said initial jobless claims fell to 837,000, a decrease of 36,000 from the previous week's revised level of 873,000.

Economists had expected jobless claims to dip to 850,000 from the 870,000 originally reported for the previous week.

With the bigger than expected decrease, jobless claims slid to their lowest level since before the coronavirus-induced lockdowns in March.

The Labor Department said the less volatile four-week moving average also slipped to 867,250, a decrease of 11,750 from the previous week's revised average of 879,000.

Continuing claims, a reading on the number of people receiving ongoing unemployment assistance, plunged by 980,000 to 11.767 million in the week ended September 19th.

The four-week moving average of continuing claims also tumbled to 12,701,250, a decrease of 381,250 from the previous week's revised average of 13,082,500.

On Friday, the Labor Department is scheduled to release its more closely watched monthly employment report for September.

Economists expect employment to increase by about 850,000 jobs in September after jumping by 1.371 million jobs in August. The unemployment rate is expected to edge down to 8.2 percent from 8.4 percent.


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