Overview of the week commencing 4 September
Graham Cross, CEO
A global look this week, focussing on China and the US.
Both the official manufacturing PMI, published by the National Bureau of Statistics, and the unofficial PMI, published by Markit/Caixin, evidenced improved output during August.
The official index moved from 51.4 in July to 51.7 in August with the unofficial index moving higher from 51.1 to 51.6. Indeed, Caixin are reporting on the ‘strongest increase in new business for just over three years’.
That’s good news because it indicates that China’s heavy industry is growing at a pace which is slow enough to ease the burden of over capacity but fast enough to maintain fuller employment.
In that context, we are happy so long as those index readings remain inside the 50.0 - 53.0 range.
In the US the Bureau of Labor Statistics (BLS) counts an additional 156,000 on August’s non farm payroll account. That’s some way off the 180,000 pace thus far in 2017 and some way too from the 179,000 that formed the consensus expectation. In fact, the actual number falls short of even the more pessimistic end of the consensus range.
At the same time, the BLS reports that the unemployment rate has ticked up from a 16-year low of 4.4 percent to 4.5 percent and that year-on-year wage growth held steady at 2.5 percent. It’s probably wise not to read too much into one month’s worth of data – and particularly if that month is August. August is a notoriously slow month and often attracts later revision.