- Revolving credit outstanding declines.
- Nonrevolving credit strength moderates.
- USA| Oct 07 2024
U.S. Consumer Credit Usage Moderates in August
by:Tom Moeller
|in:Economy in Brief
- Germany| Oct 07 2024
German Orders Sink
German orders fell by 5.8% in August as foreign orders fell by 2.2% and domestic orders plunged by 10.9%. This weakness offsets a period of strength in July and June in which total orders had risen 3.9% and 4.6% in respective months, and in which foreign orders had risen by 5.2% and 1.4%, while domestic orders had risen by 2.2% in July and by 9.1% in June. The sizeable declines in August nullify or substantially blunt the strength in orders seen in the previous two months. Domestic orders measured year-over-year in July mark their first increase since February 2022; however, that gain is now gone and turned to a year-on-year drop in August. Foreign orders have had more episodes of showing gains year-over-year; they too showed a year-over-year gain in July, but in August that's also gone. However, foreign orders also showed a year-over-year gain in April of this year, and in March, and in December of last year. Year-over-year gains are not so unusual for foreign orders; however, gains have been very scarce for domestic orders.
Order trend- The trend for German orders is positive overall with a three-month growth rate of 9.6% up from -1.9% over six months and that's up from -4% over 12 months; the progression is a reassuring acceleration. However, the monthly detail and pattern of how this progression has been created is not so reassuring. Foreign orders are the driving force behind this improvement with a three-month real order growth rate at an 18.4% annual rate, up from 1.9% annual growth over six months, and that's up from a decline of 1.3% over 12 months. There is also progress in terms of domestic orders, but it's much less robust. Over three months domestic orders fall at a 2.5% annual rate; that's less than a 6.9% annual rate fall over six months which is less than an 8% drop over 12 months. It is a progression toward improvement, but these are all negative numbers.
Sales trends- Trends for real sales show mixed results in August compared to July. Over three months manufacturing shows a gain in real sales at a 0.4% annual rate; that's up from a 3.2% annual rate decline over six months, but the six-month decline was slightly worse than a 3.1% annual rate drop over 12 months. There's only a hint of better sales based on real sales trends; looking at sector data is not terribly rewarding either.
Industrial surveys- industrial gauges for Germany, France, Italy, and Spain all show negative readings in August. For Germany and Italy the negative readings worsen while for France and Spain the negative readings slightly improve month-to-month. There was also split performance in July between these four countries in terms of improvement or deterioration.
Quarter to date- Quarter-to-date trends show strong results for German orders overall, but these are supported by a tenuous monthly pattern that has the strength mostly back-loaded in June, and to some extent, in July as August parades significant weakness. Quarter-to-date German real orders are growing at a 16.9% annual rate, foreign real orders are up at a 20.4% annual rate, domestic real orders are up at a 12.5% annual rate. In the same quarter-to-date period, real sales overall, as well as by sector, produce negative numbers for growth.
Industrial data queue standings- The queue standings for the industrial data show Germany and Italy with extreme weakness as exhibited in their low standings on ranked data back to 1990. Both France and Spain have rankings just short of the 60-percentile mark, for each; it’s a reading above their respective median, but still a moderate reading- not a strong one.
Summing up The August orders report for Germany unravels what had been an improving trend. While real sales showed a rebound in August, it was not enough to create a solid uptrend for momentum. In the rest of Europe, industrial indicators rank from moderate to very weak. The German industrial picture remains soured while Europe shows no sign of breaking out of its industrial torpor.
- Asia| Oct 07 2024
Economic Letter From Asia: A Golden Week
In this week’s newsletter, we explore regional monetary policy, China’s Golden Week holidays, and Japan’s political landscape. Despite the Fed's 50 bps cut in September, many central banks in the Asia opted to maintain their current policy rates, largely due to domestic factors (Chart 1). However, we may see more exceptions this week, as both New Zealand and potentially South Korea appear poised to reduce rates (Chart 2). Inflation trends are also crucial, with recent price pressures easing thanks to declining energy costs. Nevertheless, escalating geopolitical tensions in the Middle East could hamper progress toward disinflation (Chart 3). Turning to China, recent easing measures have been positively received by markets. However, we observed preliminary signs of price stabilization in Hong Kong markets as Chinese markets undergo the Golden Week holidays (Chart 4). We also examine the potential spillover effects of China’s easing, particularly through currency fluctuations (see Chart 5) and the impact of the easing measures on consumer sentiment and spending. Finally, we examine Japan’s political landscape, focusing on market reactions to Ishiba’s appointment as Prime Minister. His dovish remarks have bolstered Japanese equities while contributing to renewed weakness in the yen (see Chart 6).
Updates on monetary policy While the Fed's 50 bps cut in September opened the door for central banks in the Asia-Pacific region to follow suit, many chose to maintain their current policy rates (Chart 1), primarily due to domestic considerations. Notably, the central banks of Japan, Australia, Taiwan, and Malaysia left their rates unchanged in September. For instance, Australia's central bank remains concerned about inflation, while Taiwan's central bank is focused on issues like household debt and the property market. Meanwhile, Malaysia's central bank sees no immediate need to begin an easing cycle, as inflation is under control and growth remains steady. Additionally, maintaining the current policy rates may be beneficial for some economies from a yield perspective, as yield differentials have either become more favourable (or less unfavourable) for their respective currencies.
- USA| Oct 04 2024
U.S. Payroll Employment Accelerates in September and Wage Growth Firms; Jobless Rate Edges Lower
- Surprising job strength is narrowly based.
- Earnings increase is better-than-expected; August pay growth lifted.
- Jobless rate slips to three-month low.
by:Tom Moeller
|in:Economy in Brief
- France| Oct 04 2024
French IP Ignites for a Month
French industrial output rose sharply in August, a gain of 1.6% after declining by 0.2% in July. Output in August was led by consumer goods; nondurable goods output increased 4.2% month-to-month in August while consumer durable goods output increased by 3% month-to-month. Output of capital goods was also strong during the month, with a 1.6% gain, although intermediate goods output continued to be weak, falling by 0.4% in August and dropping for the second month in a row.
Sequentially French output explodes over three months although it's relatively mild mannered over 12 months and over six months. The strength in French output is relatively recent. Manufacturing output gains 0.3% over 12 months; over six months it is falling at a 0.5% annual rate but that transforms into a 31.1% annual rate over three months as output sharply recovered in June and in August.
Sequential growth for MFG components Components find consumer durable goods output falling by 6.3% over 12 months, gaining at a 4% annual rate over six months then rising at a strong 14.9% annual rate over three months showing steady acceleration. Consumer nondurable goods output rises by 5.9% over 12 months; output slows to gain at a 4.3% annual rate over six months then it expands sharply to grow at a 19% annual rate over three months. French capital goods output is up only 0.3% over 12 months, but it then expands at a 1.5% annual rate over six months and gains at a 14.2% annual rate over three months showing steadily accelerating growth on this time sequence. Intermediate goods output falls by 3.4% over 12 months, falls more sharply, at a 6.6% annual rate over six months, then cuts that weakness to only a 0.2% annual rate drop over three months.
Quarter-to-date With two months into the third quarter, manufacturing output is rising at 1.6% annual rate, with consumer nondurable output up at a 7% annual rate and consumer durable goods output up at a 3.8% annual rate. Capital goods output is up at a 4.3% annual rate; intermediate goods output is falling at a 5% annual rate in the quarter-to-date.
During this period when output has been experiencing some mild increases, they have transformed into strong increases over three months. Yet, motor vehicle registrations have been consistently weak. That important big ticket consumer item has not taken off.
- Global| Oct 04 2024
Charts of the Week: Geopolitical Scarring
In recent weeks, financial markets have generally aligned with expectations of a soft landing for the global economy, facilitated by more accommodative policies from central banks (see chart 1). This week’s dataflow have largely reinforced these views (see chart 2) as have the communications from many policymakers. However, the escalation of geopolitical turbulence in the Middle East in recent days is now challenging this narrative. By potentially choking supply chains and raising risk premiums in energy markets, there could be growth and inflation-related consequences for the world economy in the coming weeks (see charts 3). This also serves as a reminder that there are longer-term headwinds that are placing a brake on global growth at present, including high real energy prices (chart 4), de-globalization pressures (chart 5) and lingering debt-related imbalances (see chart 6). And many of these issues could be exacerbated if the turmoil in the Middle East were to intensify.
by:Andrew Cates
|in:Economy in Brief
- 54.9 in September vs. 51.5 in August, higher than expected; 3.1 pts. above the 12-month avg. of 51.8.
- Business Activity (59.9, a four-month high), New Orders (59.4, the highest since Feb. ’23), Employment (48.1, the first contraction since June), and Supplier Deliveries (52.1 vs. 49.6).
- Prices Index rises 2.1 pts. to 59.4, the highest since January.
- USA| Oct 03 2024
U.S. Factory Orders & Shipments Ease in August
- Improved y/y in orders momentum remains in place.
- Shipments weighed down by a decline in nondefense aircraft sales.
- Unfilled orders and inventories rise modestly.
by:Tom Moeller
|in:Economy in Brief
- of2572Go to 15 page