The Purchasing Managers Index (PMI) Manufacturing reports have now been released for the month of July after Switzerland’s data was released this morning. On the one hand (remember that one handed economist?) July’s readings were a little better than June (well, less bad would probably be a better description) where 14 nations saw a higher absolute number (compared to 10 better in June). Lower data than the previous month fell to 19 nations (from 26 a month ago). The G8 nations reported 4 higher than last month (Canada, Italy, Japan & Russia) and 3 lower (France, Germany & the US) whilst the UK was unchanged.
On the other hand, in terms of the key level of 50 (above = expansion, below = contraction), 22 nations are now below 50 (versus 20 a month ago) and 14 are above (from 16 last time). Out of the G8, only 2 nations are above 50 (Canada & US). Germany weakened again and languishes second weakest out of all 36 reports, shortly followed by the Eurozone as a whole and closely followed by the UK. China rose to 49.9 and has continued to trade either side of the 50 level for the past 6 months. The US still remains towards the top of the list, although yesterday’s report saw the headline ISM number fall to 51.2, which is the weakest since Sep 2016. Interestingly, the Markit version of the report came in at 50.4, barely above the key 50 level.
Today’s star turn is the Non-Farm Payrolls (NFP) report for July where the headline figure came in at 164k against expectations of 165k, but there was a two-month revision of -41k making last months higher than expected report more in-line with forecasts before the release. The unemployment rate was stable at 3.7%.with Average Hourly Earnings a little higher at 0.3% pushing the year-on-year rate to 3.2% from 3.1% which was expected and prior. A solid NFP report which justifies the 25bp cut not an outlying 50bp cut.
The US Treasury market had a barmy sesion last night as there was a move to take down risk assets on the back of a further trade tariff tweet from President Trump, however, all has calmed today after a quite frantic week in the markets. Phew.