Yesterday we had the release of China’s PMI numbers, which showed the service industry contracted in August for the first time since the height of the pandemic early last year. The manufacturing PMI was a little lower than expected at 50.1 from last month’s 50.4 and below economists’ forecast of 50.2, however the real shocker was the non-manufacturing PMI. It slumped to 47.5 from the August figure of 53.3. The median forecast was for a pullback to 52.0. This drove the composite to 48.9, its first reading below the 50 boom/bust level since February 2020. The composite peaked in May at 54.2 and has fallen in each of the following three months. Today's gloomy reading indicates the delta outbreak impact was much more severe than expected and is likely to fan expectations for further accommodation.
On the other side of the coin, we had Japan’s data that was generally better than expected. Yes, Industrial output fell 1.5% in July, however it followed a 6.5% jump in June and was better than the 2.5% drop predicted. Additionally, the unemployment rate unexpectedly slipped to 2.8% from 2.9%, and the job-to-applicant ratio rose to 1.15 from 1.13, defying forecasts for a decline. Lastly, housing starts jumped more than expected, coming in at 9.9% well above the eyed 5.3%.
Staying with Japan, we read that Nomura has told its staff in Japan not to smoke during working hours — even if they’re working from home. Nomura sent a memo yesterday outlining the new policy that will come into effect in October. Additionally, the bank will close all smoking rooms being managed by the Nomura Group by the end of the year. The reason behind this move, according to the note, is to keep its employees and their families healthy. The new rules will be based on mutual trust and don’t include a punitive clause.
Enjoy your guilty pleasures whilst you still can!