In August, the non-manufacturing ISM rose from 46.4 to 48.4, slightly above the consensus estimate. Both business activity (51.3 from 46.1) and new export orders (54.0 from 47.5) rose above the 50 boom/bust level in August, while new orders halted just below the benchmark level (49.9 from 48.1). Also inventory sentiment (67.5 from 62.5), employment (43.5 from 41.5) and imports (49.0 from 45.0) im-proved, while backlog of orders (41.0 from 42.0), supplier deliveries (49.0 from 50.0) and inventory change (43.0 from 47.0) deteriorated somewhat. Prices paid rose sharply in August from 41.3 to 63.1, indicating that better activity prospects are giving companies again pricing power. The report confirms the improvement of conditions in the US economy, just like it did in most other major countries.
In the week ended August 29, initial claims fell by 4 000, from an upwardly revised 574 000 to 570 000, while the consensus was looking for a figure of 564 000. ,Con-tinuing claims in the week ended August 22, rose by 92 000 to a total number of 6 234 000, more than 100 000 above the expected outcome. Especially the continuing claims remain at rather elevated levels, but they usually tend to peak at the reces-sion’s trough or shortly thereafter. The decline in initial claims in recent weeks is dis-appointing, but we nevertheless stick to our expectation that they will improve further in the next weeks.
EMU: Retail sales decline unexpectedly in July
In July, euro zone retail sales dropped by 0.2% M/M, while a marginal increase was expected. The June figure was however upwardly revised from -0.2% M/M to 0.0% M/M. The details show that weakness was based in food, drink and tobacco (-0.5% M/M), while non food products stayed flat. The unexpected decline in July retail sales is a bit disappointing as markets were hoping for a boost in sales due to the summer discounts, but if we the revisions into account, retail sales were broadly in line with expectations.
The final figure of August services PMI showed a slight upward revision compared to the first estimate. The headline index was adjusted from 49.5 to 49.9, while an un-changed reading was forecasted. National data showed a downward revision in Germany, while Italian and French services PMI were upwardly adjusted. The final figure of euro zone composite PMI showed an increase to 50.4 from a first estimate of 50.0.
Other: UK services PMI expands further
In the UK, services PMI extended its rebound in August after rising into expansion-ary territory in July. The headline index increased from 53.2 to 54.1, marginally above the consensus estimate (54.0). The improvement was driven by a 3 points in-crease in business expectations, but also employment increased, while new busi-ness deteriorated. Prices were somewhat mixed as prices charged is still below 50, while the input prices index remains below 50. The index is now in expansionary ter-ritory for the fourth consecutive month, which raises expectations that the UK econ-omy might come out of recession in the third quarter.
