U.S. Industrials output growth slips to near three-and-a-half year low
US Sector PMI indices are compiled from responses to questionnaires sent to purchasing managers in IHS Markit’s US manufacturing and services PMI survey panels, covering
over 1,000 private sector companies. (…) Industrials firms signalled only a fractional increase in output during August, according to the US Sector PMITM. The rate of expansion eased to the slowest in the current sequence of growth that began in April 2016. Of the monitored sectors that indicated an expansion, industrials registered the weakest rise. (…)
The rate of expansion among consumer services companies, meanwhile, eased to a three-month low and was only slight.
Only the Financials Business Activity Index posted below the 50.0 neutral mark in August, albeit signalling a negligible fall in output. It marked the first sub-50.0 reading since January for the sector.
In contrast, technology and consumer goods firms recorded the fastest rates of expansion for four months, with the former topping the output growth rankings table. The upturn across the technology sector was solid overall, with a modest increase registered across the consumer goods segment. (…)
I find this chart particularly interesting for IT where input inflation is higher and output prices decline.
Worldwide, automobiles remains the weakest sector (more on that below):
Small Business Economy Remains Steady, Despite Doom and Gloom Narrative That’s Hampering Expectations
The Optimism Index fell 1.6 points to 103.1, historically a very solid reading and still with in the top 15 percent of all readings. (…) The decline in the Index was driven by weakened expectations for the future as significantly fewer owners expected better business conditions and better real sales volumes in the coming months. This accounted for 80 percent of the Index decline. (…)
U.S. Consumer Credit Usage Strengthens
Consumer credit outstanding surged $23.30 billion (5.2% y/y) during July after increasing $13.79 billion in June, revised from $14.58 billion. It was the largest increase since November 2017. (…)
Chinese Automobile Sales Decline for 14th Time in 15 Months
Sales of sedans, sport utility vehicles, minivans and multipurpose vehicles in August fell 9.9% from a year earlier to 1.59 million units, the China Passenger Car Association said Monday. (…)
Separately, Indian car sales tumbled 41% — the most on record — in August amid a prolonged slump in that country. In the U.S., which was experiencing its own downturn, automakers posted a much-needed rebound last month — though deliveries were helped by the inclusion of Labor Day weekend in August.
Chinese Consumer Prices Fattened by Precious Pork Overall consumer-price index rose 2.8% from a year earlier
(…) China’s core consumer-inflation rate, which strips out volatile food and energy prices, slipped to a three-year low of 1.5% in August, reflecting sluggish domestic demand.
The producer-price inflation rate last month fell further into deflationary territory, down 0.8% from a year earlier, piling pressure on manufacturers that have been struggling with declining orders as the U.S.-China trade war intensified. (…)
China Scraps Foreign Investment Limit in Stock, Bond Markets
Global funds no longer need approvals to purchase quotas to buy Chinese stocks and bonds, the State Administration of Foreign Exchange said in a statement on Tuesday. It removed the $300 billion overall cap on overseas purchases of the assets, about two-thirds of which remain unused.
It’s the latest push by Chinese authorities to increase use of the yuan in international transactions, and comes as they seek out more foreign capital to balance payments. Scrapping the investment quota is also another step in policy makers’ efforts to open up China’s financial system to the world. (…)
Separately, the country has allowed foreign banks and insurers to take controlling stakes in their local ventures. UBS Group AG, JPMorgan Chase & Co. and Nomura Holdings Inc. have all won approval for majority control of their local securities joint ventures, while Goldman Sachs Group Inc. and DBS Group Holdings Ltd. have applications pending. (…)
Tough times for tech:
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WeWork IPO valuation likely below $20 billion, clouding SoftBank’s vision WeWork owner The We Company is weighing slashing the valuation of its forthcoming IPO to below $20 billion, two sources said, in the latest headwind for leading shareholder SoftBank Group whose key group portfolio firms have tumbled in value.
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SoftBank Pushes WeWork to Postpone Its Contentious IPO
The inquiry will look into whether Google has illegally raised online advertising costs and whether its search results are skewed in a way that harms competition.
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Judge lets Facebook privacy class action proceed, calls company’s views ‘so wrong’ A federal judge on Monday ordered Facebook Inc to face most of a nationwide lawsuit seeking damages for letting third parties such as Cambridge Analytica access users’ private data, calling the social media company’s views on privacy “so wrong.”
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Margrethe Vestager holds on to EU’s top competition role
(…) During her time as competition enforcer, Ms Vestager has dished out record fines for Google and demanded the Irish government clawback taxes from Apple. (…)
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Uber, Lyft Poised to Lose Fight Against California Measure The proposed bill would force ride-sharing companies Uber and Lyft to reclassify many drivers as full-time employees, likely upending their business model.
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The Gig Could Be Up for Ride Hailers A California bill stands to bring significant increases in expenses
(…) If passed, the bill could force gig-economy platforms including Uber and DoorDash to reclassify independent contractors as employees in the state. (…)
At the national level, the definition of gig workers has been hotly contested. Earlier this year, the Trump administration’s Labor Department classified workers finding clients through online platforms as contractors who can pursue external opportunities “at their leisure.” This is a departure from the department’s stance under President Obama when it said classification should be based on whether the workers are “integral” to the business. (…)
Morgan Stanley estimates the employer-status law could increase California driver costs by 35%. (…) . Deutsche Bank estimates California accounts for roughly 20% of Lyft’s bookings, while Cowen reckons California will comprise roughly 6% of core platform gross bookings for Uber in 2020. A broader reclassification across the U.S. also would impact Lyft more than Uber given it is mostly domestic. (…)
A larger risk is that a California reclassification could be adopted in other states. California is a “petri dish for blue states,” say analysts at Cowen, suggesting the likes of New York, New Jersey, Washington and Illinois could follow with similar legislation. (…)
