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The pound gained over 0.5% against the US dollar yesterday but seeks stability from economic data to extend its rebound
It was all swings and roundabouts for US investors yesterday as they struggled to keep up with a string of mixed economic data. The US dollar ended Wednesday’s session 0.6% down on the pound and 0.5% down on the euro.
US factory orders increased by 1.2% from the previous month to $586.1 million in August, exceeding market expectations of a 0.2% rise and after a 2.1% decline in July.
Private companies in the US hired 89,000 workers in September, below forecasts of a 153,000 increase and marking the lowest monthly increase since January 2021. Jobs were created in leisure/hospitality, construction, and financial activities but employment decreased in business services, trade/transportation, and manufacturing.
The Eurozone services PMI was confirmed at 48.7, while the composite printed at 47.2. The producer price index (PPI) was up 0.6% in August, meeting the market’s forecast. These data points seem to have fuelled the euro’s climb.
The UK services sector contracted less than expected yesterday, falling to 49.3 in September from 49.5 in August. This came as business activity and new work continued to decline.
The report revealed that UK business sentiment remained resilient, new work decreased fractionally, and inflationary pressures are at the lowest they’ve been for almost two-and-a-half years. Find the composite results below.
At the Tory party conference yesterday, prime minister Rishi Sunak formally announced that the Manchester leg of the HS2 rail link from Birmingham to Manchester has been cancelled. Attempting to spin a positive, the PM said the project had overrun in costs, so it no longer made economic sense.
This morning data revealed the trade surplus in Germany increased to €16.6 billion in August 2023 from €15.9 bn in July. Exports declined by 1.2% and imports unexpectedly dropped 0.4%.
Today economists will be digesting construction PMI results for the UK, Euro area, France, Germany, Italy and India. This afternoon, the US trade deficit is forecast to shrink slightly to $58.3 billion from $65 billion in July.
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GBP: Private sector business declines
S&P Global’s composite purchasing managers’ indices yesterday revealed that UK private sector business activity declined in September to 48.5 from 48.6 in August. This signalled the fastest reduction in private-sector output since January.
GBP/USD: the past year
EUR: PPI decline not far off market forecasts
Producer prices in the euro area fell by 11.5% in August, following a 7.6% decrease in July, but only slightly off the forecasted 11.6% drop. This decline in producer prices was the sharpest on record and was driven by falling costs for energy and intermediate goods.
USD: ISM services PMI eases
The ISM services PMI eased to 53.6 in September from 54.5 in August, a six-month high, and this was in line with market expectations.
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