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Market News August 30-September 3, heavy events and indicators impact prospects: non-agricultural attacks!

August 30-September 3, heavy events and indicators impact prospects: non-agricultural attacks!

September will be ushered in next week, and the overall market will also have new data changes. In terms of economic data, August consumer confidence index data for the Eurozone, August official manufacturing PMI data for China, August ADP employment data for the United States, and the United States The July trade account data and the August non-agricultural employment report in the United States are worthy of attention.

2021-08-28
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Next week will usher in September. In terms of economic data, August consumer confidence index data for the Eurozone, August official manufacturing PMI data for China, August ADP employment data for the United States, July trade account data for the United States, and August non-ADP data for the United States The statistics of the agricultural employment report are worthy of attention.

In terms of events, Focus on OPEC and non-OPEC oil-producing countries held the 20th ministerial meeting, and focused on Fed Bostic’s speech on the themes of "Achieving an Inclusive Economy" and "Intertwined: Economic Opportunities for All."



Monday (August 30) Keywords: Eurozone consumer confidence index in August, US existing home sales index after seasonal adjustment in July




According to data from the European Commission on July 29, the Eurozone economic sentiment index hit a record high in July, but consumer optimism has declined. The slowdown in the index growth rate may indicate that the peak is approaching.


According to the European Commission, a monthly survey conducted on 19 euro zone countries showed that the economic sentiment index rose to 119.0 points in July, the highest record since data collection began in 1985, and 117.9 points higher than the 21-year high set in June. The point is even higher.

However, as the positive impact of the reopening of economic activity began to weaken, and concerns surrounding the Delta variant virus, the rate of growth of the index slowed.

The European Commission’s statement stated that “compared to the past few months, the improvement in the latest data is much weaker, which shows that the indicator is approaching its peak.”

Optimism in the manufacturing industry reached a new high, which supported the rise in the economic climate index in July. Factory managers remained optimistic and confidence in the manufacturing industry increased repeatedly this year.

Confidence in the service industry has also risen to the highest level since August 2007. The service industry has been hit hardest during the epidemic and is the main beneficiary of the current economic reopening.

However, after a five-month rebound, consumer confidence in the Eurozone has declined, dampening overall confidence gains, partly because households’ assessment of the future economic situation and major purchase plans has deteriorated. This has led to a slight decline in optimism in the retail industry.

Therefore, it is unlikely that there will be a substantial increase in the Eurozone consumer confidence index in August.

Tuesday (August 31) Keywords: China's August official manufacturing PMI, Eurozone CPI data




China's official non-manufacturing PMI in July showed a decline in construction industry activities, but considering the time of the investigation, the data failed to reflect the impact of the Delta virus epidemic on the service industry. The trend of non-manufacturing activities in August may be reversed, with construction activities performing better, while service industries are in trouble due to the impact of the epidemic.

Despite continuous pressure from seasonal factors such as heavy rains and floods, construction activity may have accelerated in August. In the first three weeks of August, rebar stocks were on average 48% higher than the pre-epidemic level, and lower than the July average of 50% higher, indicating a slight increase in construction activity.

The high-frequency indicators of the service industry are mixed, but in general, the service industry may continue the obvious signs of weakness since July.

Since the end of July, the outbreak of the epidemic has led to tightening of restrictions. As the epidemic was brought under control, restrictions began to be relaxed in various places from mid-August. Close contact services are most affected during this period, and this impact may last until most of August.

Compared with the slowdown in sales at the end of July and the first week of August, real estate sales have recovered in mid-August. But it is still far below the level before the outbreak in the first half of July.

Car sales are even weaker, with average sales in the first three weeks of August being 45% lower than the pre-epidemic level, compared to July’s 13% lower than the pre-epidemic level.

The current market expects that China's official manufacturing PMI in August will continue to remain in the expansion area, but will slightly fall back to 50.1 from 50.4 in July. Similarly, the Caixin Manufacturing PMI, which focuses on export-oriented companies, may fall to 50.2 from 50.3 in July. It is estimated that China's official non-manufacturing PMI in August may fall back to 51.7 from 53.3 in July.



The Eurozone CPI data on August 31 is worth paying attention to. The Eurozone will release a series of data in the last few days of August. As far as the entire Eurozone is concerned, the acceleration in price increases was largely affected by the temporary cut in consumption tax in Germany last year and the change in the timing of summer sales in the Eurozone. Supply bottlenecks have also exacerbated the pressure of rising prices. The accelerated rise in inflation in the euro zone is likely to reflect the return of German value-added tax to normal, the impact of seasonal discounts in France and Italy, and the increase in energy and hotel prices in Spain.

Analysts predict that the Harmonized Consumer Price Index (HICP) in the Eurozone in August will rise to 2.7% year-on-year due to rising clothing and footwear prices, up from 2.2% in July. The core number CP annual rate will rise from 0.7% in July to 1.5%.

In July, overall inflation in the Eurozone rose to 2.2% from 1.9% in June. Last year, Germany’s temporary cut in consumption tax and the upward pressure on prices caused by rising food and natural gas prices completely offset the negative impact of the advancement of the summer sales season in France and Italy.

The summer sales season this year has been advanced to July. Last year was August, which led to a decline in the prices of clothing and daily necessities in July compared with a year ago, which lowered the inflation rate. On the contrary, in August, the situation is expected to drive higher overall inflation rate and core inflation rate.

Both overall and core inflation rates should rise further in September, but this is mainly driven by statistical effects. The downward pressure brought about by the seasonal decline in the prices of travel-related services should be offset by the reduction in the weight of such items in this year's HICP basket.



Keywords for Wednesday, September 1st: US ISM Manufacturing PMI




According to data released by the American Institute of Supply Management (ISM) on August 2, the ISM manufacturing PMI of the United States recorded 59.50 in July, slightly worse than the expected 60.9, which is the second consecutive month of slowdown. The manufacturing new orders index is 64.9, which is expected to be 64.3, and it was 66 in June. This is the second consecutive month of decline in this sub-index. However, as factory inventories are still tight and corporate warehouses are almost empty, the slowdown in new orders is expected to improve in the future.

The manufacturing price payment index is 85.7, expected 88, and a record 92.1 in June. The decline in the manufacturing price payment index in July was the largest since March 2020, which shows that the data supports the argument of Fed Chairman Powell, that is, with With the easing of supply constraints, the pressure of rising inflation will ease.

The manufacturing employment index was 52.9, expected to be 51.4, and 49.9 in June. Last month, after six consecutive months of expansion, the employment sub-index fell below the 50 mark. This indicates that the manufacturer hired more workers in July. This also means that the July employment report may be even better.

The order backlog index was 65, which was 64.5 in June. The sub-index continues to rise, indicating that supply and transportation challenges are limiting the growth of the manufacturing industry.

The sub-index of manufacturing customer inventories hit a record low of only 25.

Timothy R. Fiore, chairman of the Manufacturing Committee under the ISM Association, said in the report that members of the Business Investigation Committee report that their companies and suppliers continue to struggle to meet growing demand. As we enter the third quarter, all parts of the manufacturing industry have been affected by many factors such as record-breaking raw material delivery cycles, continued shortages of key basic materials, rising prices of bulk commodities, and difficulties in product transportation. Shortages of workers, shortages of parts leading to short-term work stoppages, and difficulties in filling vacant positions still limit the growth potential of the manufacturing industry.

Comments showed that the situation of labor and supplier deliveries improved slightly, but this was offset by transportation issues. Problems such as high backlog levels, low customer inventories, and near-record lead times for raw materials continue to occur. Labor issues and low transportation efficiency across the entire value chain are the main obstacles limiting growth.

The current market expects the PMI of the US ISM manufacturing industry to be 59 in August.

Thursday, September 2 Keywords: US July trade account, changes in the number of initial jobless claims




The US merchandise trade deficit narrowed to its lowest level in three months in July, and imports fell from record highs. Data released by the US Department of Commerce this Friday showed that the trade deficit narrowed to 86.4 billion U.S. dollars, which was revised to 92.1 billion U.S. dollars in June. The data is smaller than expected by all economists surveyed by Bloomberg.

Imports fell 1.4% to 233.9 billion US dollars, mainly due to the decline in consumer goods imports. The only category that saw a sequential increase was automobiles.

With the inoculation of the vaccine, the American people were able to carry out activities that could not be carried out in the early stage of the epidemic, thus shifting the focus of spending to the service industry and reducing spending on consumer goods. Exports rose for the fifth consecutive month, climbing 1.5% to 147.6 billion U.S. dollars, a record. Exports of all sectors generally rose, with capital goods, automobiles and consumer goods leading the rise. Wholesale inventories climbed 0.6%, while retail inventories rose 0.4%.

Overall, the total value of U.S. imports and exports fell from a record high in June to $381.5 billion. When the final report, including the service industry, is released on September 2, July's trade performance will attract more attention.

French Trade Minister Franck Riester said that France and the United States are still negotiating an aluminum tariff agreement, which may be reached before the end of this year. In an interview with Bloomberg Television at the Medef business conference in Paris on Thursday, Riester said that the trade situation between the United States and the European Union is "getting better."

Regarding aluminum tariffs, Riester said that the agreement may not be close at hand, but we are working hard. This is good news because we have not taken very specific actions on this in the past. I am optimistic, but very focused. The agreement may be reached before the end of the year. We still have a lot of work to do in the future, because there are still many controversies, and there are still many problems for Europe.

The current market expects the US trade deficit in July to be 74.5 billion U.S. dollars.

The change in the number of initial jobless claims is also worthy of attention. The number of first-time jobless claims in the United States has risen for the first time in five weeks, and the road to a full recovery in the labor market is still not smooth.

According to data released by the US Department of Labor on August 26, in the week ending August 21, the number of people claiming unemployment benefits for the first time reached 353,000, an increase of 4,000 from the previous week. Bloomberg survey estimates that the median value is 350,000.

As of the week of August 14th, the number of continuous applications for unemployment benefits dropped slightly to 2.9 million.

The increase in the number of initial jobless claims may reflect weekly data fluctuations in the context of rising labor demand. The recent outbreak caused by the delta strain poses a risk, but so far, there is little evidence that health concerns have caused companies to lay off staff.

The Biden administration stated in a letter to lawmakers this Thursday that supplementary unemployment benefits should expire as planned in more than two weeks. However, given the raging delta epidemic, state and local governments can continue to use anti-employment benefits after the deadline. Epidemic relief funds to provide unemployment assistance.

Secretary of the Treasury Yellen and Secretary of Labor Marty Walsh wrote, “In some states with high unemployment, it may be reasonable to allow the unemployed to continue to receive assistance for a longer period of time. This will allow them more time. Find a job. The delta strain may pose short-term challenges to the local economy and labor market."

The weekly supplementary unemployment benefit program of $300 will expire on September 6, and the White House is still unwilling to approve the extension of the program.

Friday, September 3 Keywords: US non-agricultural employment report in August




The US government stated that although Congress is not required to extend supplementary unemployment benefits, state and local governments can use the funds they received from the anti-epidemic assistance program passed in March to continue to provide assistance to the unemployed. The US government will also announce a US$47 million subsidy for reemployment services.

Nearly 1.9 million new jobs were created in June and July, but analysts have difficulty judging whether this rate will continue. It is initially estimated that there will be an increase of 763,000 jobs in August, but after the ADP releases the private employment report early this week or on Wednesday, pay attention to whether there is the latest estimate.

If the growth of the previous two months continues, it may be enough for Fed officials to announce that they have made "substantial further progress" in achieving full employment and price stability goals. This may make a decision at the September meeting on the long-awaited "scaling" of the Fed's $120 billion monthly debt purchases, or at least trigger a more intense debate.

US non-agricultural productivity growth slowed in the second quarter, and unit labor costs were revised down in the first quarter, far below the initial value. In the second quarter, the annual rate of non-agricultural productivity, which measures the output of each worker per hour, increased by 2.3%. The data for the first quarter was revised downwards, showing an annualized productivity growth rate of 4.3%, compared to the initial value of 5.4%.

A survey released by the National Federation of Independent Businesses (NFIB) on Tuesday showed that due to labor shortages still a problem, the confidence of small and medium-sized business owners across the United States in the economic recovery fell in July.

Canadian Imperial Bank of Commerce: The non-agricultural employment population in the United States is expected to increase by 900,000 in August, and the unemployment rate may drop to 5.2%.

Recruitment activities in August seem to continue to be active, as the number of jobless applicants has fallen further shows this. Higher wages and recruitment efforts may boost the non-agricultural employment population by 900,000 people, and the market consensus is expected to be 665,000.

It is expected that the increase in job opportunities will once again be concentrated in the reopened service areas, while state and local governments could have used recent federal funds to further increase the number of employees. A substantial increase in jobs may cause the unemployment rate to drop to 5.2%, although the labor force participation rate is set to rise. The average hourly wage rate may drop to 0.3% per month, but this is still a strong level, reflecting the continuing labor shortage.
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