US data one pager ending August 31st.

International Economic Highlights (Aug. 25-31, 2011)

This article contains summaries of the major economic releases for the past week. Release information is broken up by region: U.S., Europe, and Asia-Pacific.

The last bullet point for each region highlights the upcoming economic reports. When there is a number in parentheses after the date, it is our forecast.

U.S.

• U.S. factory orders jumped 2.4% in July, after June was upwardly revised to a 0.4% drop (previously down 0.8%). Total factory orders are up 12.6% year to date. The durable orders component was revised to a 4.1% increase from the 4.0% previously reported on a 43.4% jump in civilian aircraft orders. Auto orders were also up 9.8%, indicating that Japan crisis-related supply disruptions are easing. Together with the better-than-expected Chicago ISM/PMI reading, it supports expectations that the manufacturing recovery is still in place, in contrast with last week's dismal Philly Fed reading.
• The ADP survey showed private payrolls rose 91,000 in August from 109,000 in July. The services sector added 80,000 jobs, while the goods producing sector added 11,000 with manufacturing up 4,000 and construction up 7,000 jobs. The report was probably not adjusted for the Verizon strike.
• The Chicago ISM/PMI index edged down 2.3 points to 56.5 in August, though it was still a bit stronger than the consensus expectation of 54.0. Although it's the lowest reading since November 2009, it remains at more than the 50-point benchmark, indicating growth, for 23 straight months.
• Second-quarter U.S. GDP growth was revised down to 1.0% from 1.3%. Personal consumption expenditures (PCE) rose 0.4% in the second quarter, revised up from a 0.1% rate previously estimated, though the same as the 0.4% rate in the first quarter. Fixed investment rose 8.7%, stronger than the estimated 5.9% rate and the 1.2% rate in the first quarter. Inventories subtracted $8.5 billion from the second quarter, down from the earlier estimate of a $0.5 billion gain. Net exports added $3.1 billion, much smaller than the $18.7 billion addition estimated in the advanced report.
• Minutes of the Aug. 9 Federal Open Market Committee (FOMC) meeting showed that Fed officials discussed a variety of actions, including another round of Treasury bond purchases. All felt that monetary policy couldn't fully address the "various strains" on the economy, though most felt that it could "contribute importantly" to better outcomes for maximum employment and price stability. The new forward-looking "extended period" language seems to be a compromise, with a "few members" wanting a "more substantial move," but accepting the "stronger forward guidance." Three members dissented, preferring the guidance language of the June statement.
• The S&P Case-Shiller home price index (20-cities) was up 1.1% on a nonseasonally adjusted basis over May, and up for the third straight month. However, on a seasonally adjusted basis, the index fell 0.1%, indicating that seasonal factors are still at play. The index is down 4.5% year over year in June. The 20-cities index is now down 31.6% from its July 2006 peak, a smaller drop than the 33.4% record low seen in March.
• Personal income rose by 0.3% month over month in July. However, personal consumption expenditure (PCE) surged 0.8% over June, which was much stronger than the 0.5% increase that consensus expected. Spending on durable goods surged 1.9% over June, likely because of car sales. However, nondurable goods expenditures were also up 0.7% in July. The savings rate fell back to 5.0% from 5.5% the month before.
• The Conference Board's consumer confidence index plunged 14.7 points to 44.5 in August, worse than the 53.3 that consensus expected and at the lowest level since April 2009. The expectations index fell 23 points to 51.9 in August. The present situations component slipped to 33.3 from 35.7 in July. People are worried about their jobs and Washington's gridlock, and the U.S. downgrade didn't help.
• The University of Michigan's U.S. consumer sentiment index fell to 55.7 in August in the final print from 63.7 in July and edged up slightly from the 54.9 reading in the preliminary August print. Current conditions decreased to 68.7 from 75.8 the prior month. The index of consumer expectations dropped to 47.4 from 56.0 in July. The one-year-ahead inflation index rose to 3.5% from July's 3.4% pace.
• U.S. initial jobless claims rose 5,000 to 417,000 in the week ended Aug. 20 after the previous week was upwardly revised to 412,000 (previously 408,000 claims). The reading was also larger than the consensus expectation of 405,000, though the Verizon strike added an additional 8,500 claims, explaining some of the difference. Continuing claims dropped 80,000 to 3.641 million in the week ended Aug. 13, pushing the adjusted insured unemployment rate to 2.9% from 3.0% the week before.
• Oil prices rose to $89 per barrel on Wednesday (early afternoon) from $86 per barrel the previous week, on positive U.S. economic data and EIA inventory data showing a 5.3 million-barrel rise in crude stocks versus the 0.5 million barrels expected. Gasoline supplies fell 2.8 million barrels versus an expected 1.0 million-barrel drop.
• U.S. bond yields edged up three basis points (bps) to 2.2% on Wednesday (early afternoon) as investors continued to remain cautiously optimistic amid better-than-expected U.S. economic data. Mortgage rates decreased to 4.32%. Mortgage applications dropped to 9.6% during the week ended Aug. 19 following a drop of 2.4% the previous week. The refi index slipped 12.2% after a 1.7% drop the prior week. The purchase index rose 0.9% this week, following a drop of 5.7% the previous week.
• The dollar was mixed against most trading partners this week, as investors focused on rising concerns that Italy is struggling to cope with its debt burden, while the prospect of more U.S. monetary stimulus weighed on the dollar. The euro slipped marginally to $1.441/€ on Wednesday (early afternoon) from $1.447/€ the previous week. The yen fell slightly to ¥76.52/$ this week from ¥76.51/$ the previous week.
• Coming releases: Second-quarter productivity revenue (Sept. 1; negative 0.5). Second-quarter unit labor costs (Sept. 1; 2.4). Initial claims (Sept. 1; 405). ISM (Mfg) (Sept. 1; 48.0). Construction spending (Sept. 1; 0.2), Unit vehicle sales (Sept. 1; 12.3), Nonfarm payrolls (Sept. 2; 50,000), Unemployment rate (Sept. 2; 9.1). ISM-NMI (Sept. 6; 51.0), Beige book for Sept. 20 FOMC meeting (Sept. 7). U.S. trade (Sept. 8; negative $50.0 billion). Initial claims (Sept. 8). Consumer credit (Sept. 8; $6.0 billion). Wholesale trade sales (Sept. 9; 0.6).

Europe

• The eurozone's unemployment rate remained unchanged at 10% in July, holding steady for the fifth consecutive month, against market expectations for a decline to 9.9%. The jobless rate rose 61,000 during the period to a nine-month high of 15.75 million.

• Eurozone economic sentiment fell to 98.3 in August from 103 in July, its weakest reading since May 2010, underlining prospects for slower economic growth.
• The eurozone's consumer confidence index fell to negative 16.5 from negative 11.2, the biggest one-month drop since 1990.
• The GfK NOP consumer confidence index for the U.K. dropped to negative 31 in August from negative 30 in July.
• Eurozone consumer price inflation held at 2.5% in August, the lowest rate since February 2011.
• Coming releases: France, EMU, Germany, Italy, Switzerland, U.K. Manufacturing PMI (Sept. 1). Switzerland GDP (Sept. 1). Retail sales (Sept. 1). Germany GDP private consumption (Sept. 1). Equipment and construction investments (Sept. 1). Government spending (Sept. 1). Exports (Sept. 1). Imports (Sept. 1). U.K. Nationwide house prices (Sept. 1). EMU PPI (Sept. 2). U.K. Construction PMI (Sept. 2). U.K. HBOS house prices (Sept. 5). France, Germany, EMU, Italy, U.K. services PMI (Sept. 5). EMU composite PMI (Sept. 5). U.K., EMU retail sales (Sept. 5). Germany industrial production (Sept. 5). Switzerland CPI (Sept. 6). Germany factory orders (Sept 6). U.K., Germany industrial production (Sept. 7). U.K. manufacturing production (Sept. 7).

Japan And Other Asia-Pacific

• Japan's industrial production (IP) rose by 0.6% month over month in July, weaker than the consensus estimate of 1.5%, on yen gains and slowing global growth. IP in Korea moderated to 3.8% year over year compared with the market consensus for an increase of 6.6%, adding to concerns about sputtering economic growth.
• Japan's manufacturing PMI slid to 51.9 in August from 52.1 in July. The index remains higher than the 50-point threshold that separates contraction from expansion for a fourth month but fell to its lowest since June 2011.
• Japan's jobless rate rose to 4.7% in July as payrolls fell by 40,000 from the previous month. It is now at its highest point since April 2011 when it fell to 4.5%, following the natural disasters.
• India's GDP grew 7.7% year over year in the second quarter, its slowest pace in 18 months, confirming fears of a slowdown after India's central bank continues to raise interest rates to control inflation.
• Retail sales in New Zealand increased 0.9% month over month, following a 1.1% increase in the first quarter, indicating that economic activity is improving after suffering from the natural disasters that struck earlier this year.
• Coming releases: Auto sales (Sept. 1) Leading index (Sept. 7). Machinery orders (excluding electrical and shipments) (Sept. 7). Trade balance (Sept. 7). Current account (Sept. 7). GDP (Sept. 8). Consumer confidence (Sept. 9). Industrial production (Sept. 14).