Manufacturing across the globe dominates headlines

Yesterday’s markets

4th August 2015

  • Spanish Manufacturing PMI: 53.6
  • UK Manufacturing PMI: 51.9
  • US Core PCE Price Index m/m: 0.1%
  • US Personal Spending m/m: 0.2%
  • US ISM Manufacturing PMI: 52.7
  • AUD Retail Sales m/m: 0.7%
  • AUD Trade Balance: -2.93B

In the early hours of the morning there was once again more disappointing news from China. Factory activity in the world's second largest economy shrank the most in two years in July, as new orders fell more than expected. The reading was the lowest since July 2013 and highlights further weakness in the sector. The central bank has already cut interest rates four times since November. This prolonged slowdown could have a profound effect on commodity prices and therefore the currency associated with them.

In the European trading hours, the UK and Eurozone released their manufacturing data. Starting with the UK, manufacturing growth picked up in July but remained around the stagnant level. This is largely due to the strength of the Pound. This resulted in a slight slump to new orders, which slowed to 52.2, its lowest since September 2014. There was little effect on Sterling as the service sector is the dominate sector. Meanwhile, Eurozone's manufacturing sector continued to grow modestly in July, suggesting any effect from the Greek debt crisis remained limited.

Crossing the pond we saw mixed data hit the wires. Firstly, U.S. manufacturers expanded at a slower pace in July. Like the UK, the US is contending with the fallout of having a strong currency. In a separate report we also saw US consumer spending rose a modest 0.2% in June, one month after outlays rose at the fastest pace in a year and a half. Finally, the core PCE index (a measure of inflation that excludes food and energy) advanced by 0.1% in June, and it’s up 1.3% over the past year. 

Today’s markets

3rd August 2015

  • AUD Cash Rate
  • RBA Rate Statement
  • UK Construction PMI
  • US Factory Orders m/m
  • NZD GDT Price Index
  • NZD Employment Change q/q
  • NZD Unemployment Rate

The quietest day of the week in terms of economic data releases. Much of the focus will be on the UK with the Halifax house price index and the PMI construction data.