Weekly Wrap-Up

Last Week In Markets: July 31 - Aug 4, 2017

Fisher Investments recaps the biggest market, political and economic news from last week, including business expansion data (PMIs), employment data and the Bank of England monetary policy announcement.

US economic data were mixed. June consumer spending rose 0.1% m/m, although disposable income was flat from May. In July, employers added 209,000 nonfarm jobs and the unemployment rate decreased to 4.3%. Business expansion continued, although at a slower-than-expected pace: The July ISM manufacturing Purchasing Managers’ Index (PMI) and non-manufacturing PMI fell to 56.3 and 53.9, respectively. (Readings above 50 indicate expansion.) Construction spending in June fell 1.3% m/m, missing expectations. June exports increased to $194.4 billion and imports increased to $238.0 billion—reflecting strong domestic demand.

Eurozone data were likewise mixed. The initial estimate of Q2 2017 GDP showed 0.6% q/q growth, accelerating from Q1. June retail sales rose 0.5% m/m, topping expectations. Likewise, June unemployment fell to 9.1%, beating forecasts. The July composite Markit PMI decelerated to 55.7 from June but still reflects underappreciated strength. (For more on eurozone PMIs, see the August 4 MarketMinder.com article, The Eurozone’s Journey From the Abyss.) In the UK, the Markit/CIPS July manufacturing and non-manufacturing PMIs reflected expansion at 55.1 and 53.8, respectively. The Bank of England left interest rates and its asset purchase program unchanged, citing sluggish growth expectations.

Japanese business expansion continues, albeit more slowly, as the Markit July manufacturing and services PMIs fell to 52.1 and 52.0, respectively. Japan’s June construction orders grew 2.3% y/y. In politics, Prime Minister Shinzo Abe appointed a new cabinet, hoping to shore up his tumbling popularity amid several scandals plaguing his administration. In China, the official July manufacturing and non-manufacturing PMIs slowed from June, but continue to reflect expansion at 51.4 and 54.5, respectively.

The Week Ahead:

The US releases inflation figures. The UK releases trade, industrial production and manufacturing data. Japan releases an update on its leading economic index and bank loan data. China releases trade, money supply and loan growth data.

Source for all data cited is FactSet. This update constitutes the general views of Fisher Investments and should not be regarded as personalized investment advice. No assurances are made we will continue to hold these views, which may change at any time based on new information, analysis or reconsideration. In addition, no assurances are made regarding the accuracy of any forecast made herein. Global equities are represented by the MSCI World Index. The MSCI World Index measures the performance of selected stocks in 23 developed countries and is presented net of dividend withholding taxes and uses a Luxembourg tax basis. Past performance is no guarantee of future results. A risk of loss is involved with investments in stock markets.