In August, the ISM manufacturing index rose back into expansionary territory for the first time since January 2008. The headline index rose from 48.9 to 52.9, while the consensus was looking for a figure of 50.5. The improvement was led by new orders (64.9 from 55.3) and production (61.9 from 57.9), but also backlog of orders (52.5 from 50.0), supplier deliveries (57.1 from 52.0), inventories (34.4 from 33.5), employment (46.4 from 45.6) and new export orders (55.5 from 50.5) rose. Customer inventories and imports fell somewhat. Also remarkable was the increase in prices paid (from 55.0 to 65.0). This was the first expansion in the manufacturing ISM in 19 months and clearly indicates that the manufacturing sector is recovering.
In July, US pending home sales rose for the sixth consecutive month. On a monthly basis, pending home sales increased by 3.2% M/M, while the consensus was looking for a rise by 1.5% M/M. The improvement was led by the West (12.1% M/M) and South (3.1% M/M), while sales in the Northeast and Midwest dropped. The recent improvement in the US housing market indicates that the government’s measures are starting to have their impact.
EMU: unemployment at highest level in 10 years
In July, the euro zone unemployment rate rose from 9.4% to 9.5%, exactly matching the expectations. The euro zone unemployment rate is now at its highest level in more than 10 years. Eurostat estimates that 15.090 million men and women were unemployed in July, an increase by 167 000 since June. In Germany, unemployment fell by 1 000 after dropping by a revised 5 000 in July, while an increase by 30 000 was forecasted. The unexpected drop in unemployment was due to the government scheme to subsidise part-time work.
The final figure of euro zone manufacturing PMI showed a marginal upward revision compared to the first estimate. The headline figure was adjusted from 47.8 to 48.2, while an unchanged reading was forecasted. National details showed upward revisions in Germany and France, while Italy faced a downward adjustment.
Other: UK manufacturing contracts again in August
In August, the UK manufacturing sector unexpectedly fell back into contraction after expanding in the previous months. The manufacturing PMI dropped from a downwardly revised 50.2 (previous 50.8) to 49.7, while the consensus had expected an improvement (to 51.5). The outcome is a bit disappointing and indicates that sentiment remains fragile in the manufacturing sector.
UK mortgage approvals rose from an upwardly revised 47 891 in June to 50 123 in July, in line with the consensus estimate. Mortgage approvals in the UK are now at the highest level since April 2008 indicating that the housing slump is abating, but they remain significantly below the long-term average. Total consumer lending fell by 635 million in July, the first decline in consumer lending since records started in 1993, which means that there were more repayments of consumer debt than new loans. Net consumer lending fell by 217M and mortgage lending dropped by 418M.
