Weekly Wrap-Up

Last Week In Markets: Oct 18 - Oct 22 2021

Fisher Investments recaps the biggest market, political and economic news from last week, including US, UK, eurozone and Japan PMI readings, UK inflation data and US LEI estimates.

In the US, the October Markit Flash Manufacturing Purchasing Managers’ Index (PMI) fell slightly to 59.2 while the October Markit Flash Services PMI climbed to 58.2. Readings over 50 indicate expansion. September industrial and manufacturing production fell 1.3% m/m and 0.8% m/m, respectively, both missing estimates. The Conference Board’s September Leading Economic Index (LEI) increased 0.2% from the prior month—less than expected.

In the eurozone, the October Markit Flash Manufacturing and Services PMIs fell to 58.5 and 54.7, respectively. September core consumer prices (excluding energy, food, alcohol and tobacco) rose 1.9% y/y, in line with expectations. In the UK, the October Markit/CIPS Flash Manufacturing and Services PMIs exceeded expectations—coming in at 57.7 and 58.0, respectively. September retail sales decreased 1.3% y/y and 0.2% m/m—missing forecasts. September core consumer prices (excluding energy, food, alcohol and tobacco) rose 2.9% y/y and 0.4% m/m, slightly less than forecast.

In Japan, the October Jibun Bank Flash Manufacturing PMI rose to 53.0. September core-core consumer prices (excluding fresh food and energy) fell 0.5% y/y, the same rate as the previous month. Preliminary September exports grew 13.0% y/y, higher than expected, while imports increased 38.6% y/y. In China, September retail sales rose 4.4% y/y, surpassing expectations. Q3 2021 GDP grew 4.9% y/y, narrowly missing consensus estimates. Headlines focused on real estate woes, combined with September’s electricity shortage, impacting China’s economic growth. However, we believe these issues have likely been overstated and miss a more important point: Q3’s GDP growth rate is right in line with China’s long-running trend. In our view, that makes these results more of a return to pre-pandemic normal than a sign of sudden big problems. For more, please see our 10/18/2021 commentary, “No Surprises in China’s Slowdown.”

The Week Ahead:

The US and eurozone release the first estimates of Q3 2021 GDP. The eurozone and UK report September money supply. Japan reports September preliminary retail sales, preliminary industrial production and unemployment. The European Central Bank and Bank of Japan meet to set their respective monetary policies.