Foreign Exchange Market Update

October 2, 2023

United States (U.S.): Manufacturing PMI Climbs to Ten-Month High in September

The Institute for Supply Management released a report showing a modest slowdown in the pace of contraction in U.S. manufacturing activity in September. The ISM said its manufacturing PMI rose to 49.0 in September from 47.6 in August, although a reading below 50 indicates a contraction. Economists had expected the index to inch up to 47.7. The modest increase by the headline index came as the new orders index increased to 49.2 in September from 46.8 in August, while the production index climbed to 52.5 in September from 50.0 in August. The employment index also rose to 51.2 in September from 48.5 in August, indicating a turnaround in employment in the manufacturing sector. Meanwhile, the ISM said the prices index slid to 43.8 in September from 48.4 in August, suggesting prices decreased faster. 10/02/2023 - 10:39:00 (RTTNews)

United Kingdom (U.K.): Manufacturing Downturn Continues

British Pound traded at 1.2129 against USD at 9:00 am PST.

The U.K. factory downturn continued in September on weak output, new orders, and employment, final survey results from S&P Global showed. The Chartered Institute of Procurement & Supply factory PMI posted 44.3 in September, up from a 39-month low of 43.0. The reading was above 44.2, estimated initially. Although the reading improved from August, this was among the weakest seen over the last 14 years. All five sub-indices of PMI signaled a weakening of underlying sector performance.

Companies reduced production in response to lower order intakes. Production declined for the seventh consecutive month. Reflecting lower demand from Europe, the U.S., mainland China, and Brazil, new export business contracted again in September. The ongoing downturns in output and new orders forced companies to cut back employment. The rate of decline was the second-steepest in the current twelve consecutive months of contraction. The survey showed that backlogs of work decreased for the seventeenth straight month and at the fastest pace since April 2020. At the same time, the decline in purchasing activity was close to August's 39-month high.

Further, average supplier delivery times improved again as supply chains continued to repair following the stresses of recent years. On the price front, the survey showed that input costs decreased due to weaker demand in September. In contrast, selling prices increased for the first time in four months. 10/02/2023 - 09:31:00 (RTTNews)

European Union (E.U.): Eurozone Manufacturing Sector Stuck in Deep Contraction; Unemployment Rate Drops in August

Euro traded at 1.0502 against USD at 9:00 am PST.

The purchasing managers' survey results from S&P Global showed that the  area manufacturing activity remained in the deep contraction zone in September because of considerable weakness in new orders and accelerated job fall. Meanwhile, official data suggested that the unemployment rate dropped to record lows in August, indicating the labor market’s resilience. The HCOB manufacturing Purchasing Managers' Index, or PMI, fell to 43.4 in September from 43.5 in August, final data from S&P Global showed. The score has remained below the crucial 50.0 mark for the fifteenth straight month, signaling a sustained deterioration in the manufacturing sector’s health. New orders received by manufacturers logged a rapid decline, which was the steepest in the 26-year survey history. In response to falling demand, they reduced production levels slightly faster than in August. Due to the absence of demand pressure, there was further progress on backlogs of work.

Consequently, manufacturers reduced employment at the quickest rate in nearly three years. Purchasing activity was lowered for the 15th consecutive month in September. Further, stocks of inputs posted an accelerated decline. Likewise, post-production inventories dropped at the quickest pace in two years. Operating expenses decreased at the slowest pace since April. Firms reduced their output prices for the fifth straight month to remain competitive. There was a marked softening of growth expectations as business confidence slumped to a ten-month low. Germany continued to log the fastest rate of decline, followed by France. Although Italy and Spain registered worsening activity, the rates of deterioration slowed. The German manufacturing sector remained firmly in the contraction territory. The factory PMI registered 39.6 in September, up from 39.1 in August. The score was below the flash reading of 39.8. France's manufacturing activity slid deeper into contraction in September, with production and new orders falling at one of their sharpest rates in almost three-and-a-half years. At 44.2, the factory PMI was down from 46.0 in August.

The initial estimate score for September was 43.6. Declines in production and new orders drove Italy's manufacturing downturn in September. The factory PMI posted 46.8, up from 45.4 a month ago. The decline was the least marked since early 2023. Spain's manufacturing activity registered concurrent falls in both output and new orders. The PMI rose to 47.7 in September from 46.5 in August. The sector contracted for six successive months. Official data showed that the unemployment rate in the 20-nation currency bloc dropped in August to a joint record low last seen in June. The jobless rate fell marginally to 6.4% from 6.5% in July. In the same period last year, the rate stood at 6.7%. The rate also matched expectations. Data showed that unemployment decreased by 107,000 from July to 10.856 million. Compared to last year, joblessness fell by 407,000. The youth unemployment rate eased slightly to 13.8% from 13.9% in the previous month. 10/02/2023 - 09:13:00 (RTTNews)

The euro area jobless rate dropped slightly in August despite weaker economic activity, data from Eurostat revealed. The unemployment rate fell marginally to 6.4% in August from 6.5% in July. In the same period last year, the rate stood at 6.7%. The rate matched a record low in June and was aligned with expectations. Data showed that unemployment decreased by 107,000 from July to 10.856 million. Compared to last year, unemployment fell by 407,000. The youth unemployment rate eased slightly in August. The rate was 13.8% compared to 13.9% in the previous month. The overall unemployment rate in the EU27 also eased marginally in August. The jobless rate peaked at 5.9%, down from 6.0% in July. 10/02/2023 - 07:13:00 (RTTNews)