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Fed Waller: Depending on job growth, could be ready to announce tapering in Sep

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    ActionForex
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    Fed Governor Governor Christopher Waller told CNBC that if August and September jobs report show growth in 800k range, that would be “substantial progress”. Fed could then be “ready to do an announcement in September” on tapering asset purchases.

    “That depends on what the next two job reports do,” he added. “If they come in as strong as the last one, then I think you’ve made the progress you need. If they don’t, then you’re probably going to have to push things back a couple months.”

    “In my view, with tapering we should go early and go fast in order to make sure we’re in position to raise rates in 2022 if we have to,” he said. “I’m not saying we would, but if we wanted to, we need to have some policy space by the end of the year.”

    Waller also expected inflation to return to normal once the impacts of the pandemic wane. “My concern is just anecdotal evidence I’m hearing from business contacts, who are saying they’re able to pass prices through. They fully intend to. They’ve got pricing power for the first time in a decade,” he said. “Those are the sorts of issues that make you concerned that this may not be transitory.”

    US ISM manufacturing dropped to 59.5, corresponds to 4.7% annualized GDP growth

      By
      ActionForex
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      US ISM Manufacturing dropped from 60.6 to 59.5 in July, below expectation of 60.8. ISM said “the past relationship between the Manufacturing PMI and the overall economy indicates that the Manufacturing PMI for July (59.5 percent) corresponds to a 4.7-percent increase in real gross domestic product (GDP) on an annualized basis,”

      Looking at some more details, new orders dropped from 66.0 to 64.9. Production dropped from 60.8 to 58.4. Employment rose from 3.0 to 52.9. Supplier deliveries dropped from -2.6 to 72.5. Prices dropped -6.4 to 85.7.

      Full release here.

      UK PMI manufacturing finalized at 60.4, stretched supply chains led to sharp rise in costs

        By
        ActionForex
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        UK PMI Manufacturing was finalized at 60.4 in July, down from June’s 63.9. Markit said output and new order growth eased to four-month lows. Stretched supply chains led to sharp rise in costs.

        Rob Dobson, Director at IHS Markit, said: “Although July saw UK manufacturers report a further month of solid growth, scarcities of inputs, transport and labour are stifling many businesses. On one hand, manufacturers are benefiting from reopening economies…. On the other, the recent surge in global manufacturing growth has led to another month of near-record supply chain delays, exacerbated by factories and their customers building up safety stocks….

        “Demand outstripping supply is also driving up prices. Input costs again rose at a near survey-record pace, leading to a near-record increase in manufacturers’ selling prices. Amid growing indications that many supply chain disruptions and raw material shortages are unlikely to be fully resolved until 2022, the outlook remains one of constrained growth combined with high inflation for the foreseeable future.”

        Full release here.

        Eurozone PMI manufacturing finalized at 62.8, inflows of new orders outstripping production to unprecedented extent

          By
          ActionForex
          -

          Eurozone PMI Manufacturing was finalized at 62.8 in July, down from June’s 63.4. Markit said output and order growth rates slowed, but employment rose at survey-record pace. Inflation rates hit new highs as supply chain disruptions continue.

          The readings for most member states except Germany declined, but remained strong: Netherlands (67.4), Germany (65.9), Austria (63.9), Italy (60.3), Spain (58.0), France (58.0), Greece (57.4).

          Chris Williamson, Chief Business Economist at IHS Markit said: “July survey showed inflows of new orders outstripping production to an extent unprecedented in the survey’s 24-year history. Capacity constraint indicators continue to flash red. Input shortages worsened again in July at a near record rate and July saw another near-record rise in backlogs of work…. Prices pressures meanwhile show no sign of abating, with July seeing another record increase in both input costs and prices charged for goods as demand exceeds supply, and concerns over future supply availability flare up again.”

          Full release here.

          Germany PMI manufacturing finalized at 65.9, record employment and prices

            By
            ActionForex
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            Germany PMI Manufacturing was finalized at 65.9 in July, up from June’s 65.1. The future was the third-highest since the survey began in 1996. There was survey-record increase in employment. Also, both price indices reached new record highs.

            Trevor Balchin, Economics Director at IHS Markit, said: “Faster growth of new orders and employment boosted the German manufacturing sector in July… the latest survey results provided further evidence that output growth is being constrained by supply shortages….with overall demand for raw materials strengthening, input price inflation accelerated to a new survey record high. Consequently, the rate of output price inflation hit a new peak for the fifth month running.”

            Full release here.

            France PMI manufacturing finalized at 58.0, strong growth despite supply-side challenges

              By
              ActionForex
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              France PMI Manufacturing was finalized at 58.0 in July, down from June’s 59.0. Markit said production growth remained strong, but slowed. Supplier performance continued to deteriorate substantially. Input prices rose at fastest rate since March 2011.

              Joe Hayes, Senior Economist at IHS Markit, said: “Despite some strong supply-side challenges for goods producers, the France Manufacturing PMI survey showed strong growth in output during July. France has now enjoyed an unchecked period of production growth that began in February, but the survey raises a number of things to remain wary over…

              “Firms are currently dealing with rapidly deteriorating supplier performance and intense input price inflation…. higher prices firms are paying to secure inputs is being passed on to output charges, which rose at a record rate…

              “Firms don’t seem to have such a problem paying more for their inputs because demand is so strong and they can pass this through to their clients. These are the perfect conditions for rising consumer price inflation and could soon make uncomfortable viewing for policymakers.”

              Full release here.

              Swiss CPI rose to 0.7% yoy in Jul, retail sales rose 0.1% yoy in Jun

                By
                ActionForex
                -

                Swiss CPI came in at -0.1% mom, 0.7% yoy in July, matched expectations. That compared to June’s reading of 0.1% mom, 0.6% yoy. Retail sales rose 0.1% yoy mom in real term in June, well below expectation of 3.4% yoy. Sales excluding service stations dropped -0.5% yoy. Food, drinks and tobacco dropped -2.1% yoy. Non-food sector rose 1.2% yoy.

                China Caixin PMI manufacturing dropped to 50.3 in Jul, recovery not yet solid

                  By
                  ActionForex
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                  China Caixin PMI Manufacturing dropped to 50.3 in July, down from 51.3, below expectation of 51.0. Caixin said output growth slowed amid slight drop in new orders. Staffing levels were broadly unchanged while inflationary pressures eased.

                  Wang Zhe, Senior Economist at Caixin Insight Group said: “China’s official second-quarter economic figures were in line with expectations, but the Caixin China manufacturing PMI in July and relevant data suggested the recovery of the economy is not yet solid. The economy is still facing huge downward pressure, and we need to ensure entrepreneurs’ confidence.”

                  Full release here.

                  Japan PMI manufacturing finalized at 53.0 in Jul, sharp rise in cost burdens

                    By
                    ActionForex
                    -

                    Japan PMI Manufacturing was finalized at 53.0 in July, up from June’s 52.4. Markit said output and new orders rose at faster rates. There were sharp rise in cost burdens amid supply chain disruption. Businesses reported softer optimism regarding future output.

                    Usamah Bhatti, Economist at IHS Markit, said: “The Japanese manufacturing sector continued to see an improvement in operating conditions… the pace of expansion quickened as firms recorded stronger growth in both output and new orders… supply chain disruption continued to impact activity within the sector, with firms recording the second greatest deterioration in lead times in over a decade. Material shortages and logistical disruption contributed to a rapid rise in average cost burdens, as input prices rose at the fastest pace since September 2008.

                    Full report in PDF.

                    Australia AiG manufacturing dropped to 60.8, further easing ahead

                      By
                      ActionForex
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                      Australia AiG Performance of Manufacturing Index dropped -2.4 pts to 60.8 in July. Looking at some details, production rose 1.1 to 61.8. Employment rose 0.5 to 60.8. New orders dropped sharply by -8.1 to 62.5. Exports dropped -6.6 to 53.6. Input prices rose 5.8 to 84.6. Selling prices rose 1.1 to 64.7.

                      Ai Group Chief Executive Innes Willox said: “While COVID-19 outbreaks and associated restrictions in some states undoubtedly dampened the upswing in activity and shook confidence, the manufacturing sector recorded another strong month of expansion in July…. The slower pace of the manufacturing upswing in July and the slower pace of growth in new orders suggest further easing in the months ahead. A significant headwind for the sector is that Sydney’s toughest restrictions relate to local government areas where there is a concentration of manufacturing sites and the manufacturing workforce.”

                      Full release here.

                      US PCE price index unchanged at 4% yoy in Jun, core PCE rose to 3.5% yoy

                        By
                        ActionForex
                        -

                        US personal income rose 0.1%, or USD 26.1B in June, better than expectation of -0.4% contraction. Personal spending rose 1.0%, or USD 155.4B, above expectation of 0.7%.

                        Headline PCE price index was unchanged at 4.0% yoy. Core PCE price index accelerated to 3.5% yoy, up from 3.4% yoy, but missed expectation of 3.7% yoy.

                        Full release here.

                        Canada GDP contracted -0.3% mom in May, to recover 0.7% in Jun

                          By
                          ActionForex
                          -

                          Canada GDP contracted -0.3% mom in May, matched expectations. Total economic activity remained approximately -2% below prepandemic level in February 2020. Overall, 12 of 20 industrial sectors contracted, with services-producing down -0.2% and goods-producing down -0.4%. Preliminary information indices that GDP would grow 0.7% in June, and 0.6% in Q2.

                          Full release here.

                          Eurozone CPI rose to 2.2% yoy in Jul

                            By
                            ActionForex
                            -

                            Eurozone CPI rose to 2.2% yoy in July, up from 1.9% yoy, above expectation of 2.0% yoy. Energy is expected to have the highest annual rate in July (14.1%, up from 12.6%), followed by food, alcohol & tobacco (1.6%, up from 0.5%), services (0.9%, up from 0.7%) and non-energy industrial goods (0.7%, down from 1.2%).

                            Full release here.

                            Eurozone unemployment rate dropped to 7.7% in Jun, EU dropped to 7.1%

                              By
                              ActionForex
                              -

                              Eurozone unemployment rate dropped to 7.7% in June, down from 8.0%, better than expectation of 7.9%. EU Unemployment rate dropped to 7.1%, down from 7.3%.

                              Eurostat estimated that 14.916m people were unemployment in EU, of whole 12.517m in the Eurozone.

                              Full release here.

                              Eurozone GDP grew 2.0% qoq in Q2, EU up 1.9% qoq

                                By
                                ActionForex
                                -

                                Eurozone GDP grew 2.0% qoq in Q2, well above expectation of 1.5% qoq. EU GDP grew 1.9% qoq. Among the Member States for which data are available for the second quarter 2021, Portugal (+4.9%) recorded the highest increase compared to the previous quarter, followed by Austria (+4.3%) and Latvia (+3.7%), while Lithuania (+0.4%) and Czechia (+0.6%) recorded the lowest increase. The year on year growth rates were positive for all countries.

                                Full release here.

                                Germany GDP grew 1.5% qoq in Q2, -3.4% below pre-pandemic level

                                  By
                                  ActionForex
                                  -

                                  Germany GDP grew 1.5% qoq in Q2, below expectation of 2.0% qoq. Comparing to Q2 2020, GDP was up a price-adjusted 9.6% and a a price- and calendar-adjusted 9.2%. GDP was still -3.4% lower compared to Q2 2019, before the pandemic.

                                  Destatis said, “after the coronavirus crisis had caused another decline in economic performance at the beginning of 2021 (-2.1% in the first quarter, according to most recent calculations), the German economy recovered in the second quarter. This was mainly due to higher household and government final consumption expenditure.”

                                  Full release here.

                                  Swiss KOF economic barometer dropped to 129.8, economy still on a strong expansion path

                                    By
                                    ActionForex
                                    -

                                    Swiss KOF economic barometer dropped from 133.3 to 129.8 in July. But the indicate is still clearly above the long-term average. KOF added, “the economy is still on a strong expansion path, although the high pace of recent months may not to be sustained.”

                                    “The outlook for manufacturing, foreign demand, construction, financial and insurance services as well as private consumption remains favourable but is not quite as positive as in the previous month. In contrast, the outlook for accommodation and food service activities and for other services is improving,” KOF said.

                                    Full release here.

                                    France GDP grew 0.9% qoq in Q2, slightly above expectations

                                      By
                                      ActionForex
                                      -

                                      France GDP grew 0.9% qoq in Q2, slightly above expectation of 0.8% qoq. GDP still stood -3.3% below the level of Q4 2019, before the pandemic.

                                      Final internal demand (excluding inventory changes) made a positive contribution to GDP growth this quarter (+0.9 points after +0.1 points in the previous quarter). Gross fixed capital formation (GFCF) accelerated (+1.1% after +0.4%), as households’ consumption expenditure (+0.9% after +0.2%).

                                      In Q2 2021, imports (+1.9%) increased more than exports (+1.5%). Overall, foreign trade made a slightly negative contribution to GDP growth this quarter: –0.1 points, after –0.5 points in the previous quarter. Lastly, the contribution of inventory changes to the growth of the GDP was slightly positive this quarter (+0.2 points after +0.4 points in Q1 2021).

                                      Full release here.

                                      ECB de Guindos: It’s medical question first and foremost

                                        By
                                        ActionForex
                                        -

                                        Vice President Luis de Guindos said yesterday that “substantial monetary support” is needed for the economy “for some time to come. He added, “even if recovery is successful, there is still a lot of uncertainty.” Pace of inflation will “slow down again” next year as a number of one-off factors wane, such as the temporary VAT cut in Germany last year.

                                        He also said that when to end the PEPP is a “medical question first and foremost”. He added, “it depends on whether the vaccination campaigns are successful in combating the Delta variant and whether new, more resistant variants appear.”

                                        Japan industrial production rose 6.2% mom in Jun

                                          By
                                          ActionForex
                                          -

                                          Japan industrial production rose 6.2% mom in June, above expectation of 5.0% mom. Output also revised much of the -6.5% mom decline in May. Manufacturers expected production to fall -1.1% mom in July and then rise 1.7% in August.

                                          A government official said, “we are continuing to see the impact of the global chip shortage but it’s moderating somewhat, mainly for automakers… But manufacturers’ August output plan may not fully reflect the impact of the spread of new COVID-19 variants on global and domestic economies, as well as the risk of a prolonged chip shortage.”

                                          Also released, unemployment rate ticked down to 2.9% in June, down from 3.0%. Retail sales rose 0.1% yoy in May, slightly below expectation of 0.2% yoy.

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