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Swiss CPI rose to 3.5% yoy in Aug, core CPI at 2.0% yoy

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    ActionForex.com
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    Swiss CPI rose 0.3% mom in August, slightly below expectation of 0.4% mom. The monthly rise was due to several factors including rising prices for in-patient hospital services, social protection services and housing rentals. CPI core rose 0.3% mom. Domestic product prices rose 0.2% mom. Imported products prices rose 0.6% mom.

    Comparing with August 2021, CPI rose 3.5% yoy, accelerated from 3.4% yoy, matched expectations. Core inflation came in at 2.0% yoy. Domestic product prices were up 1.8% yoy. Imported product prices were up 8.6% yoy.

    Full release here.

    China Caixin PMI manufacturing dropped to 49.5 in Aug

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      ActionForex.com
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      China Caixin PMI Manufacturing dropped from 50.4 to 49.5 in August, below expectation of 50.2, back in contraction. Caixin added that output growth slowed as firms faced power supply disruption amid heatwave. New orders declined for the first time in three months. Input costs fell at quickest rate since January 2016.

      Wang Zhe, Senior Economist at Caixin Insight Group said: “Overall, the Covid-19 flare-ups, the extreme heat wave and restricted power usage resulted in a slight deterioration in overall business conditions in the manufacturing sector. Supply remained stronger than demand, with the latter recording a contraction. The job market remained weak, while lower input costs and output prices eased inflationary pressures. At the same time, firms were cautious about increasing purchases and inventory levels. Market sentiment remained optimistic, although some were worried about the global economic outlook.”

      Full release here.

      Japan PMI manufacturing finalized at 51.1 in Aug, dip likely to continue near term

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        ActionForex.com
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        Japan PMI Manufacturing was finalized at 51.1 in August, down from July’s 52.1. The health of the sector that was the joint-weakest since February 2021. S&P Global also noted new orders had the sharpest reduction since October 2020. Backlogs of work decreased for the first time in 18 months. Rise in input prices was slowest for 8 months.

        Usamah Bhatti, Economist at S&P Global Market Intelligence, said: “Latest PMI data pointed to deteriorating current activity in the Japanese manufacturing sector midway through the third quarter of 2022…. The dip is likely to continue in the near term… A benefit that has come from softer demand conditions is that pressure on supply chains has been given the opportunity to ease.”

        Full release here.

        Australia AiG manufacturing dropped to 49.3, back in contraction

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          ActionForex.com
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          Australia AiG Performance of Manufacturing Index dropped from 52.5 to 49.3 in August, indicating the first contraction since January. Production fell -1.8 pts to 45.7. Employment dropped -2.6 to 47.5. New orders dropped -4.1 to 55.8. Exports dropped -4.3 to 46.9. Sales tumbled -8.8 to 45.2. Input prices rose 2.0 to 81.7. Selling prices rose 4.6 to 69.1. Average wages rose 11.3 to 74.1.

          Innes Willox, Chief Executive of Ai Group said: “The Ai Group Australian PMI for August points to the end of the recent expansion of manufacturing activity. Production, employment and sales were all down in August and most manufacturing sectors reported lower performance in the month…. Prices and wages continued to push higher and with the Reserve Bank seeking to ease these pressures by raising interest rates, further slowing in manufacturing looks increasingly likely over the coming months.”

          Full release here.

          Fed Mester expects rates above 4% by early next year, and hold it there

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            ActionForex.com
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            Cleveland Fed President Loretta Mester said, “my current view is that it will be necessary to move the fed funds rate up to somewhat above 4 percent by early next year and hold it there; I do not anticipate the Fed cutting the fed funds rate target next year.”

            “It would be a mistake to declare victory over the inflation beast too soon. Doing so would put us back in the stop-and-go monetary policy world of the 1970s, which was very costly to households and businesses,” she added.

            Canada GDP grew 0.1% mom in Jun, but to contract -0.1% mom in Jul

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              ActionForex.com
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              Canada GDP grew 0.1% mom in June, matched expectations. Services-producing industries grew 0.2% mom while goods- producing industries rose 0.1% mom. 14 of 20 industrial sectors expanded in the month.

              Advance information indicates that real GDP edged down by -0.1% mom in July. Output was down in the manufacturing, wholesale, retail trade and utilities sectors. Declines were partly offset by increases in the mining, quarrying, oil and gas sector and the agriculture, forestry, fishing and hunting sector.

              Full release here.

              US ADP employment grew 132k, a shift towards more conservative hiring pace

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                ActionForex.com
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                US ADP private employment grew 132k in August, well below expectation of 300k. By sector, goods-producing jobs grew 23k. Services-providing jobs grew 110k. By company size, small businesses added 25k jobs, medium added 53k, large added 54k. Annual pay was up 7.6%.

                “Our data suggests a shift toward a more conservative pace of hiring, possibly as companies try to decipher the economy’s conflicting signals,” said Nela Richardson, chief economist, ADP. “We could be at an inflection point, from super-charged job gains to something more normal.”

                Full release here.

                Eurozone CPI rose to 9.1% yoy in Aug, core CPI up to 4.3% yoy

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                  ActionForex.com
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                  Eurozone CPI accelerated further from 8.9% yoy to 9.1% yoy in August, above expectation of 9.0%. CPI core (all items excluding energy, food, alcohol, and tobacco) rose from 4.0% yoy to 4.3% yoy, above expectation of 4.0% yoy.

                  Looking at the main components, energy is expected to have the highest annual rate in August (38.3%, compared with 39.6% in July), followed by food, alcohol & tobacco (10.6%, compared with 9.8% in July), non-energy industrial goods (5.0%, compared with 4.5% in July) and services (3.8%, compared with 3.7% in July).

                  Full release here.

                  France goods consumption volume dropped -0.8% mom in Jul, CPI slowed to 5.8% yoy in Aug

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                    ActionForex.com
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                    France household consumption in goods, in volume, dropped -0.8% mom in July. The decline was mainly due to further decrease of consumption of manufactured goods (–1.4% after –0.7%). Food consumption also decreased further (–0.4% after –0.3%). Energy consumption fell back (–0.4% after +2.7% in June).

                    All item CPI slowed from 6.1% yoy to 5.8% yoy in August. Food inflation rose from 6.8% yoy to 7.7% yoy. Energy inflation slowed from 28.5% yoy to 22.2% yoy. Manufactured products inflation rose from 2.7% yoy to 3.5% yoy. Services inflation was unchanged at 3.9% yoy.

                    China PMI manufacturing rose to 49.4 in Aug, contraction continued

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                      ActionForex.com
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                      China’s official PMI Manufacturing rose slightly from 49.0 to 49.4 in August, above expectation of 49.2. New orders ticked up from 48.5 to 49.2. Production was flat at 49.8. PMI Non-Manufacturing dropped from 53.8 to 52.6, above expectation of 52.2. PMI Composite dropped from 52.5 to 51.7.

                      The data showed manufacturing activity contracted for the second straight month. Also, the sector has been in contraction for five out of the past six months, briefly hitting 50.2 in June.

                      NZ ANZ business confidence improved to -47.8 in Aug

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                        ActionForex.com
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                        New Zealand ANZ Business Confidence rose from -56.7 to -47.8 in August. Own Activity Outlook rose from -8.7 to -4.0. Export intentions rose from -2.7 to 3.9. Investment intentions rose from -2.6 to -2.0. Employment intentions rose from 1.1 to 3.4. Pricing intentions dropped from 74.0 to 70.1. Cost expectations dropped from 91.3 to 90.9. Inflation expectations dropped slightly from 6.23 to 6.13.

                        ANZ said: “It would make sense that with inflation and wage inflation running so high, the neutral Official Cash Rate is creeping higher, meaning the sting of a given interest rate wears off. Risks are tilted towards the RBNZ having to continue on with OCR hikes next year to cool the economy sufficiently to feel comfortable they’re getting on top of the inflation problem.”

                        Full release here.

                        Japan industrial production rose 1.0% mom in Jul, auto jumped 12%

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                          ActionForex.com
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                          Japan industrial production grew 1.0% mom in July, way better than expectation of -0.5% mom decline. The Ministry of Economy, Trade and Industry maintained its output assessment, “fluctuates indecisively” reflecting the ups and downs in production in recent months.

                          Six of the 15 industries reported output increases while eight declined. The auto industry saw the biggest increase by sector, by 12.0% mom.

                          Based on a poll of manufacturers, the ministry expects industrial output to grow 5.5 percent in August and rise 0.8 percent in September.

                          Also released, retail trade rose 2.4% yoy in July, above expectation of 1.9% yoy.

                          BoJ Nakagawa: laid out three reasons for continuing powerful monetary easing

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                            ActionForex.com
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                            BoJ board member Junko Nakagawa said in a speech that it’s “necessary for the Bank of Japan to persistently continue with the current powerful monetary easing,” and she laid out three reasons for that.

                            Firstly, Japan is “still on its way to recovery” from the pandemic. “As demand remains insufficient compared with supply capacity, a shift in the direction of monetary policy toward tightening would likely drag down the economy and put significant downward pressure on the economic activity of firms and households.”

                            Secondly, current inflation in Japan “differ considerably in terms of degree and the number of items” comparing to those in the US and Europe. The difference is “likely due to the disparity in wage inflation”.

                            Thirdly, the 2% inflation target “needs to be achieved in a sustainable and stable manner”. “Even if the higher price of some items pushes up the overall price level to 2 percent, unless household disposable income increases, spending on products and services will decline due to budget constraints.” Japan is only “halfway to achieve the price stability target.

                             

                            Full speech here.

                            ECB Nagel: Larger rate hike reduces risks of de-anchoring inflation expectations

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                              ActionForex.com
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                              Bundesbank chief Joachim Nagel said yesterday that, “monetary policy must react decisively in order to preserve the credibility of the inflation target. Data from a number of countries shows that frontloading or bringing interest rate increases forward, reduces the risk of a painful economic downturn.”

                              “In my view, a larger interest rate hike reduces the risk of inflation expectations becoming de-anchored,” Nagel said. “We should not delay further rate hikes for fear of a possible recession. Inflation rates will not return to the central bank’s inflation target on their own.”

                              However, Governing Council member Yannis Stournaras said yesterday that there is “no need to take very large steps” on rate hike. “Gradual normalization will be appropriate.”

                              “In my view, this year, we will see the peak of inflation and a steady deceleration thereafter, inflation will gradually decline in 2023 and converge towards the target in 2024,” he added.

                              Fed Williams: Going to take some time before downward adjustments of rates

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                                ActionForex.com
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                                New York Fed President John Williams said, “we need to have somewhat restrictive policy to slow demand and we’re not there yet.” Nevertheless, the size of the rate hike at the September meeting will depend on the “totality” of data.

                                Going forward, “from my perspective right now, I see us needing to kind of hold a policy stance – pushing inflation down, bringing demand and supply into alignment – it’s going to take longer, will continue through next year,” he said.

                                “Based on what I’m seeing in the inflation data, and what I’m seeing in the economy, it’s going to take some time before I would expect to see adjustments of rates downward.”

                                Fed Bostic: We can dial back from 75bps if inflation is clearly slowing

                                  By
                                  ActionForex.com
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                                  In a blog post, Atlanta Fed President Raphael Bostic said, “I don’t think we are done tightening”. As inflation remains “too high”, Fed’s policy stance ” will need to move into restrictive territory if inflation is to come down expeditiously.”

                                  However, he added, “incoming data—if they clearly show that inflation has begun slowing—might give us reason to dial back from the hikes of 75 basis points that the Committee implemented in recent meetings. We will have to see how those data come in.”

                                  Full blog post here.

                                  ECB Muller: 75bps hike should be an option for Sep meeting

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                                    ActionForex.com
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                                    ECB Governing Council member Madis Muller said, “I think 75 basis points should be among the options for September given that the inflation outlook has not improved.”

                                    “Still, I’m going into the meeting with an open mind and I want to both see the new projections and hear my colleague’s arguments,” he added.

                                    “We should not be too timid with policy moves as inflation has been too high for too long and we are still far below the neutral rate,” he said.

                                    US consumer confidence rose to 103.2, but recession risks continue

                                      By
                                      ActionForex.com
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                                      US Conference Board Consumer Confidence rose notably from 95.3 to 103.2 in August, above expectation of 97.6. Present Situation Index rose from 139.7 to 145.4. Expectations Index rose from 65.6 to 75.1.

                                      “Consumer confidence increased in August after falling for three straight months,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board. “The Present Situation Index recorded a gain for the first time since March. The Expectations Index likewise improved from July’s 9-year low, but remains below a reading of 80, suggesting recession risks continue. Concerns about inflation continued their retreat but remained elevated.”

                                      “Meanwhile, purchasing intentions increased after a July pullback, and vacation intentions reached an 8-month high. Looking ahead, August’s improvement in confidence may help support spending, but inflation and additional rate hikes still pose risks to economic growth in the short term.”

                                      Full release here.

                                      Fed Barkin: Recession is obviously a risk in bringing inflation down

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                                        ActionForex.com
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                                        Richmond Fed President Thomas Barkin said, “we’re committed to returning inflation to our 2% target and we’ll do what it takes to get there. I’d expect inflation to bounce around on the way back to our target.” He didn’t expect inflation to “come down immediately”.

                                        “A recession is obviously a risk in the process,” Barkin said. But, “it doesn’t have to be like a 2008 recession, it doesn’t have to be calamitous. We’re out of balance today…returning to normal might actually mean products on shelves, cars on lots and restaurants fully staffed.”

                                        ECB Knot: Swift normalization of interest rates is essential

                                          By
                                          ActionForex.com
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                                          ECB Governing Council member Klaas Knot said, “a swift normalization of interest rates is an essential first phase, and some front-loading should not be excluded. The broadening and deepening of our inflation problem generates the need to act forcefully.”

                                          Knot saw upside risks to inflation, including from higher food and energy prices, a weaker euro, copious budget spending and rising expectations. He added that even if the slowdown in the economy were to materialize, “this in itself is unlikely to bring inflation back to our objective over the medium term.”

                                          Knot said earlier last week that a rate hike of at least 50bps is needed next week.

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