Uncle Sam enjoys some relief

Last week saw a rush of data which for all but the Brits looked pretty good.

In the US, fears of a double dip recession have been partially fed by doubts over the UK housing market, but also the way key indices have been plummeting. Well, the plummeting stopped last month.

In the US, the purchasing managers index tracking manufacturing was up in August, after falling in the three previous months. In August the index stood at 56.3 from 55.5 the month before and 60.4 in April. Bear in mind, any score over 50 is meant to point towards growth. It was the trend that was spooking markets. The fact that the index had fallen so sharply from April to July was making many very nervous. But the truth is, the April reading was exceptionally high. Under normal circumstances a score of 55.5 would have been considered to be quite decent. So August brought relief. If the index can settle in the mid 50s, then, actually, that is not half bad.

Then there was US consumer confidence. This too was up, rising from 51 to 53.5. This index had fallen during the two previous months, so again there was a sigh of relief as the downward trend appeared to reverse.

And finally there was US employment. At face value it was hard to see why markets reacted with such relief to the latest news on US employment. Total non-farm payrolls fell by 54,000 in August, matching the July decline.  But much of the decline was down to one offs. In previous months US employment had seen a temporary lift thanks to a national census and the staff required to carry it out. That’s gone now, accounting for 144,000 of the job losses. In fact, strip out the census related job losses, and a cut in public sector employment, and the month saw a 67,000 increase in payroll.

As for wages, average hourly earnings were up 0.3 per cent. Again this was greeted with relief.

But before we get too excited, here are a few warnings.

Sure, consumer confidence improved, but it remains at a very low level. Sure, the PMI for manufacturing improved, but remember, one month’s worth of data does not constitute a trend. And finally, the PMI for non-manufacturing was decidedly less rosy, declining from 54.3 to 51.5, a seven-month low.

So the news for the US, then, is a kind of hesitant good.

What about China? You may recall that last month China’s PMI was suggesting recession was drawing close for her vitally important manufacturing sector. What news would the August data bring? China sees manufacturing pull up from recession level as India booms

Uncle Sam enjoys some relief.
China sees manufacturing pull up from recession level as India booms
Europe’s recovery continues
UK stutters