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Daily Macroeconomic Digest

Wednesday 04 October
The US services sector remains resilient for now

US: ISM Services (Sept.): 53.6 vs 53.5 expected (prior: 54.5)

  • The prices index was unchanged, at a still elevated 58.9.
  • The decline in the headline index is largely due to a significant drop in new orders, down 5.7 points to 51.8, suggesting that the momentum in the service sector, while still being resilient despite rising interest rates (business activity subindex rose 1.5 points to 58.8), is set to slow down in the coming months.


US: Factory orders (Aug.): 1.2% m/m vs 0.3% expected (prior: -2.1%)

  • Ex transportation: 1.4% vs 0.2% expected (prior: 0.9%)
  • These solid increases in factory orders add to evidence that the worst is likely to be over for the US manufacturing sector.


US: ADP Employment change (Sept.): 89k vs 150k expected (prior: 180k revised from 177k)

  • Lowest reading since January 2021 but, over the last year at least, it has not been a reliable indicator of the official private payroll numbers (to be released on Friday).


Eurozone: PMI Services (Sept. F.): 48.7 vs 48.4 expected (prior: 47.9)

  • The upward revision from the flash estimate confirms the increase/stabilization in the PMI in September after its sharp slide since April.


Eurozone: Retail sales (Aug.): -1.2% m/m vs -0.5% expected (prior: -0.1% revised from -0.2%)

  • Y/y: -2.1% vs -1.0% expected (prior: -1.0%)
  • This leaves the July/August average 2.3% annualized below Q2 23.
  • However, half of the decline in August is due to France, where overall consumption is actually holding much better than retail sales.


Eurozone: PPI (Aug.): 0.6% m/m as expected (prior: -0.5%)

  • PPI y/y: -11.5% as expected (prior: -7.6%)
  • Largest annual decline ever, led by energy costs down 30.6% y/y.
  • Ex energy, PPI is up 1% y/y.


UK: PMI Services (Sept. F.): 49.3 vs 47.2 expected (prior: 49.5)

  • Significant upward revisions from the preliminary reading of 47.2, but still the lowest level since last January.
Tuesday 03 October
Significant increase in jobs openings in the US

US: JOLTS Job Openings (Aug.): 9610k vs 8815k expected (prior: 8920k revised from 8827k)

  • Unexpected increase, which was fueled by a strong increase in available positions for while-collar workers.
  • The "quits rate" (voluntary job leavers) remained at 2.3%, matching the lowest level since 2020, suggesting that Americans are less confident in their ability to find another job.
  • The ratio of openings to unemployed people remained pretty much unchanged at 1.5 vs a peak of 2 in 2022.
  • This supports the higher for longer message on rates from the Fed and even slightly increases odds of another rate hike this year, the rebalancing in the labor market being one of the key factors watched by the central bank. Friday's jobs report will of course be another important data point on that front.


Switzerland: CPI (Sept.): -0.1% m/m vs 0.0% expected (prior: 0.2%)

  • CPI y/y: 1.7% vs 1.8% expected (prior: 1.6%)
  • Core CPI y/y: 1.3% vs 1.5% expected (prior: 1.5%)
  • A tad lower than expected, but annual inflation still edged slightly higher (+0.1pp) to 1.7%. The decline in core inflation is good news for the SNB, but several domestic developments should lead to a modest increase in price pressures in the coming months: rents due to rising mortgage rates (19% of CPI), VAT will be increased next January in addition to significant rises in electricity and public transport prices.
  • This could bring inflation back to just above 2% next year.
Monday 02 October
The pace of contraction appears to be slowing in the US manufacturing sector

US: ISM Manufacturing (Sept.): 49.0 vs 47.9 expected (prior: 47.6)

  • New orders: 49.2 vs 47.8 expected (prior: 46.8)
  • Prices paid: 43.8 vs 49.0 expected (prior: 48.4)
  • Employment: 51.2 vs 48.6 expected (prior: 48.5)
  • This upside surprise leaves the index 3 points above recent lows and back to last November's level.
  • Encouragingly, the improvement in the main subindexes is broad-based and the (surprising) decline in prices paid bodes well for core goods inflation.
  • Overall, this adds to evidence that the worst should be behind us for the manufacturing sector, but the recovery is likely to be relatively slow, with the UAW strikes an additional risk in the short term.


US: Construction spending (Aug.): 0.5% m/m as expected (prior: 0.9% revised from 0.7%)

  • Construction spending increased for the eighth consecutive time and gains were broad-based (residential and non residential, public and private spending).


Eurozone: PMI Manufacturing (Sept. F.): 43.4 as expected (prior: 43.5)

  • Unchanged from the flash release, only slightly above the lowest post-pandemic levels.
  • The new orders index edged up but remains well below the 50 level and consistent with declining demand for manufactured goods.
  • By country, the headline index stays below 50 in the four biggest economies. It is the lowest in Germany where it only rose to 39.6 (instead of 39.8 in the flash release) from 39.1 in August. The index edged higher in Italy (+1.4 to 46.8) and Spain (+1.2 to 47.7) but slid in France from 46.0 to 44.2, lowest in three and half years.


Eurozone: Unemployment rate (Aug.): 6.4% as expected (prior: 6.5% revised from 6.4%)

  • Same level as in May and June, suggesting that the labor market remains very strong despite very weak economic growth.


Italy: Unemployment rate (Aug.): 7.3% vs 7.7% expected (prior: 7.5% revised from 7.6%)

  • The unemployment rate fell to its lowest level in 14 years.


Switzerland: PMI Manufacturing (Sept.): 44.9 vs 40.8 expected (prior: 39.9)

  • Back to the same level as in June after two readings below 40.
  • All activity indicators recovered some ground in September but remain below 50, except employment (50.6 from 48.3).


Friday 29 September
Eurozone and US: good desinflation progress is underway

US: Personal income (Aug): 0.4% m/m as expected (prior: 0.2%)

  • Personal income accelerated to 0.4% m/m from 0.2% m/m in July. The accelerated pace of hiring and the increase in average hours worked accounted for much of the increase in income growth.


US: Personal spending (Aug): 0.4% m/m vs 0.5% expected (prior: 0.9% revised from 0.8%)

  • Personal spending slowed to 0.4% m/m from 0.9% m/m in July driven by a reduced consumption towards durable goods (-0.6% m/m) and services (0.4% m/m).


US: Core PCE deflator (Aug): 0.1% m/m vs 0.2% expected (prior: 0.2%)

  • The Federal Reserve's preferred measure of underlying inflation rose at the slowest monthly pace since late 2020 bringing annual core inflation to 3.9% from a revised 4.3% in July.  This could help policymakers to forgo an interest-rate hike at their next meeting.


US: Wholesale inventories (Aug): -0.1% m/m vs -0.2% expected (prior: -0.2%)

  • Wholesale inventories fell less than expected, driven by a rebound in motor vehicle & parts dealers (1.1% m/m).


US: Chicago PMI (Sep): 44.1 vs 47.6 expected (prior: 48.7)

  • Business activity decreased more than expected. Prices paid rose at a slower pace, signaling expansion, whereas new orders fell and the direction reversed signaling contraction. Employment fell at a faster pace and Inventories fell at a slower pace, signaling both a contraction.


US: Consumer confidence (Michigan) (Sep): 68.1 vs 67.7 expected (prior: 69.5)

  • Final consumer sentiment index came at 68.1 from a preliminary reading of 67.7. Consumers are unsure about the trajectory of the economy given multiple sources of uncertainty around a possible government shutdown and the labor disputes in the auto industry.


Eurozone: CPI (Sep): 0.3% m/m vs 0.5% expected (prior: 0.5%)

  • The preliminary Euro-area inflation cooled for the period of September. Core inflation decelerated at 0.2% m/m, driven by significant decrease in services prices at -0.9% m/m.
  • Italy and Greece saw an increase in their prices (1.7% m/m and 1.9% m/m respectively) whereas Germany and Spain experienced a relatively modest increase in prices at 0.2% m/m and 0.6% m/m respectively.


Italy: CPI (Sep): 1.7% m/m vs 1.3% expected (prior: 0.2%)

  • Inflation in Italy accelerated more than expected. The move was driven by a significant increase in prices of shoes and clothing (26% m/m).


Germany: Retail sales (Aug): -1.2% m/m vs 0.5% expected (prior: 0.0% revised from -0.8%)

  • German retail sales decreased more than expected. On a yearly basis, retails sales decreased at -1.9% y/y in August whereas -0.7% y/y was expected.


Germany: Unemployment rate (Sep): 5.7% as expected (prior: 5.7%)


France: CPI (Sep): -0.5% m/m vs -0.3% expected (prior: 1.0%)

  • The French preliminary inflation eased more than expected despite a surge in energy prices (1.7% m/m) suggesting the underlying core is cooling. Services prices decreased by -1.6% m/m.


France: Consumer spending (Aug): -0.5% m/m as expected (prior: 0.3%)

  • Consumer spending decreased as expected. Household durables goods saw the biggest drop (-4.2% m/m) whereas automobile saw the biggest jump (2.5% m/m).




Thursday 28 September
US initial jobless claims remain very low, German inflation slightly lower than expected

US: Pending home sales (Aug.): -7.1% m/m vs -1.0% expected (prior: 0.5% revised from 0.9%)

  • The gauge of pending previously owned home sales fell to the lowest level since April 2020.
  • Mortgage rates which surged to a nearly 23-year high, still high prices and limited inventory are leading to one of the most unaffordable housing markets ever.


US: GDP (Q2 T.): 2.1% q/q vs 2.2% expected (prior: 2.2%)

  • Headline growth is unchanged from the previous estimate, but the composition is quite different, with consumption growth cut to 0.8% from 1.7%, business investment in structures revised up to 16.1% from 11.2%, and the contributions from net trade and inventories revised up by 0.26pp and 0.09pp respectively.
  • The quinquennial revisions to the national accounts have not shown any significant change in the growth profile over the five years through 2022.
  • The Q2 core PCE deflator was unrevised at 3.7%, as expected.


US: Initial jobless claims (Sept. 23): 204k vs 215k expected (prior: 202k revised from 201k)

  • Continuing claims: 1670k vs 1675k expected (prior: 1658k revised from 1662k)
  • Initial jobless claims remain very low, and well below the levels seen between March and August.


Eurozone: Economic confidence (Sept.): 93.3 vs 92.4 expected (prior: 93.6 revised from 93.3)

  • Industrial confidence: -9.0 vs -10.5 expected (prior: -9.9 revised from -10.3)
  • Services confidence: 4.0 vs 3.5 expected (prior: 4.3)
  • The economic confidence index fell for the fifth consecutive time to the very low end of the range seen since 2021.
  • On the positive side, the industrial confidence index slightly improved, but remains near the August's three-year low, while the services, retail and construction indices all edged lower.
  • Business selling price expectations in services and in retail fell but the edged higher in manufacturing and construction.


Germany: CPI (Sept Prel.): 0.2% m/m vs 0.3% expected (prior: 0.4%)

  • CPI y/y: 4.3% vs 6.4% expected (prior: 6.4%)
  • Thanks to base effects from last year’s surge in prices (special subsidized public transport ticket and a rebate on motor fuel taxes in June-August 2022), y/y inflation fell strongly in September.
  • Inflation is likely to slow further in the coming months.


Italy: Manufacturing confidence (Sept.): 96.4 vs 97.0 expected (prior: 97.7 revised from 97.8)

  • Lowest level since November 2020.


Italy: Consumer confidence (Sept.): 105.4 vs 105.5 expected (prior: 106.5)

  • Consumer confidence fell to a 6-month low.


Spain: CPI (Sept. Prel.): 0.6% m/m as expected (prior: 0.5%)

  • CPI y/y: 3.2% vs 3.3% expected (prior: 2.4%)
  • The rise in inflation was driven by an increase in utility bills and higher fuel prices.
  • Favorable base effects during the summer will continue to unwind and the headline rate is likely to continue to rise in the coming months.


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