Euro zone private sector growth beats forecasts in August: PMIs

1 of 2. Workers are seen at a Vinci construction site in the financial district of La Defense, near Paris August 1, 2013.

Credit: Reuters/Benoit Tessier

By Jonathan Cable

LONDON | Thu Aug 22, 2013 4:44am EDT

LONDON (Reuters) - Business activity across the euro zone has picked up this month at a faster pace than expected, surveys showed on Thursday, led by Germany as it benefited from growing demand for its exports.

Survey compiler Markit's Flash Composite Purchasing Managers' Index (PMI) bounced to 51.7 from last month's 50.5.

It was the highest reading since June 2011 and beat all predictions in a Reuters poll whose median forecast was for 50.9. Readings above 50 signify expansion in activity.

While growth accelerated in the euro zone's biggest economy, it was a different story in France, the bloc's No.2 economy, which saw business fall as its economy went into a summer lull.

But Markit said the composite PMI, which surveys thousands of companies across the region and is used as an indicator of growth, pointed to a 0.2-0.3 percent economic expansion in the current quarter.

That is similar to a Reuters poll taken earlier this month that predicted growth of 0.2 percent this quarter.

"It's looking good. If the euro zone is picking up then that bodes well for the global economy. The wobble in France is a bit of a worry, but hopefully that will be corrected," said Chris Williamson, Markit's chief economist.

Growth returned to the region's dominant service sector - the services PMI rose above the 50 mark for the first time since the start of last year, coming in at 51.0 after 49.8 in July.

Similarly, growth quickened among manufacturers, whose PMI rose to a 26-month high of 51.3 from 50.3.

Both PMIs beat the median expectation in a Reuters poll and the services index came in above the most optimistic forecast. The manufacturing output index, which feeds into the composite PMI, bounced to a 27-month high of 53.4 from 52.3.

An earlier flash composite PMI from Germany showed the growth rate was the fastest in seven months but in France activity declined across the board.

Support from Germany and France, the 17-nation bloc's two biggest economies, helped it escape from its longest recession on record last quarter, expanding a better-than-expected but still modest 0.3 percent.

The problem faced by the European Central Bank in trying to stimulate growth - as it has been for some years - is still the heavily indebted south. But Williamson said manufacturing and services activity was improving in the periphery.

New business in the bloc increased for the first time in just over two years, and the composite subindex rose to 50.5 from 49.7, supported by orders coming in for manufactured goods from abroad at their fastest rate since May 2011.

Despite the upturn, expectations among services firms dipped from July's 16-month high and manufacturers reduced their workforce at a faster pace than last month.

"The job shedding in part reflects the need to keep costs down and remain competitive, but there is still some uncertainty about the outlook," Williamson said.

(This story corrects month in headline to August)

(Editing by Hugh Lawson) (Reporting by Jonathan Cable)

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French business slump deepens in August, points to contraction: PMI

The logo of French group GDF Suez is seen on a building in the financial district of La Defense, near Paris August 1, 2013.

Credit: Reuters/Benoit Tessier

PARIS | Thu Aug 22, 2013 4:15am EDT

PARIS (Reuters) - France's business slump deepened in August for the first time in five months, a business survey showed on Thursday, suggesting the economy may be shrinking after a bigger-than-expected rebound in the second quarter.

Data compiler Markit said its flash composite purchasing managers index, which covers both the manufacturing and services sectors, fell to 47.9 from 49.1 in July, after improving every month since April.

While the manufacturing sector's index held steady at 49.7, it missed analysts' expectations that it would rise above the 50 point line dividing expansions from contractions.

Markit said the data suggested the euro zone's second-largest economy would contract by 0.3 percent in the third quarter, after official French data showed an unexpected 0.5 percent rebound in the second quarter.

"From the PMIs we've got no idea where that (second-quarter GDP) growth is coming from. We can't see that in the surveys at all and we're very much scratching our heads," Markit chief economist Chris Williamson said.

"If there was a rise, we think it's looking temporary and could fade in the third quarter."

However, forward-looking indicators in the survey looked more positive. Williamson said that despite the August data, where part of the slump could be due to many businesses shutting down that month, Markit expects the overall 2013 trend of an improvement in its PMI readings to continue.

"There is an easing trend in the PMIs, and given what we've seen in the rest of the region, we expect French businesses to get a little bit more confident as the year goes on and hopefully get those readings above 50, in the service sector most importantly," he said.

While the services sector index was down to 47.7 in August from 48.6 in July, widely missing analysts' expectations of a 49.2 reading, expectations that activity in the sector would improve over the next year stayed at an 11-month high.

New orders in the manufacturing sector rose slightly for the first time in over two years.

The second-quarter growth spurt pulled France out of a shallow recession, easing President Francois Hollande's government's return from a summer break. But tax hikes, rampant unemployment and the outlook for the euro zone as a whole will determine whether the rebound can last.

The quarterly rebound was stronger than most economists expected. When it published its flash PMI for May, Markit had said it expected the French economy to contract by 0.5 percent in the second quarter.

- Detailed PMI data are only available under license from Markit and customers need to apply to Markit for a license.

To subscribe to the full data, click on the link below: here

For further information, please phone Markit on +44 20 7260 2454 or email economics@markit.com

(Reporting by Ingrid Melander; Editing by Hugh Lawson)

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German private sector grows in August at strongest rate since January: PMI

Robots connect side parts on an Audi A3 light weight construction chassis at the production line of the German car manufacturer's plant in the Bavarian city of Ingolstadt April 11, 2013.

Credit: Reuters/Michaela Rehle

BERLIN | Thu Aug 22, 2013 3:32am EDT

BERLIN (Reuters) - Germany's private sector expanded in August at its fastest rate since January, a survey showed on Thursday, in a sign Europe's largest economy is back on track after a contraction late last year and a subdued start to 2013.

Markit's preliminary composite Purchasing Managers' Index (PMI), which measures growth in both the manufacturing and services sector and covers more than two-thirds of the economy, rose to 53.4 in August from 52.1 in July.

That was comfortably above the 50 threshold that separates growth from contraction and was helped by a surge in new work.

"It's an increasingly buoyant-looking picture, with manufacturing seeing its best performance for a couple of years, and alongside that there's an improving service sector, so exporters are doing well and the domestic economy is healing," said Chris Williamson, chief economist at Markit.

"I would expect to see some job growth come through in the coming months which should further cement the picture of a sustainable looking upturn," he added.

He said the PMI survey pointed to economic growth of around 0.4 percent in the third quarter, a slight slowdown after the bumper growth of 0.7 percent in the April-June quarter driven by strong domestic demand and weather-related catch-up effects.

The positive PMI reading chimed with recent data which has pointed to an upturn in Europe's powerhouse economy, including rising industrial orders, output and exports, falling unemployment and sentiment improving overall.

A sub-index from Markit showed the manufacturing sector expanding at its fastest rate in more than two years in August as output was above the 50 threshold for a fourth straight month. Backlogs of work also increased.

Factories continued to shed jobs but Williamson said this was a reflection of Germany's need to be competitive as Japan and the United Kingdom benefit from their weakened currencies rather than a cause for concern about the economic outlook.

Manufacturing firms benefited from a surge in new orders, which increased at their sharpest rate since May 2011. New contracts from abroad, which have suffered from weaker euro zone demand and a slowdown in Asia in recent months, shot up for the first time since February.

Manufacturers also got a boost from bigger margins thanks to rising factory gate prices and falling input prices. Service providers, on the other hand, suffered a squeeze on their margins as their costs rose more sharply than output prices.

A sub-index tracking the service sector showed business activity increasing at its fastest pace since February as new orders rose, albeit at a slower pace than in July.

Service providers' business expectations were in positive territory for the ninth month in a row, boding well for future business activity, and firms hired new staff for the second straight month.

- Detailed PMI data are only available under license from Markit and customers need to apply to Markit for a license.

To subscribe to the full data, click on the link below: http://www/markit.com/information/register/reuters-pmi-subscriptions

For further information, please phone Markit on +44 20 7260 2454 or email economics@markit.com

(Reporting by Michelle Martin; Editing by Hugh Lawson)

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U.S. August auto sales to rise 12 percent: J.D. Power & LMC

By Bernie Woodall

Thu Aug 22, 2013 11:09am EDT

n">(Reuters) - U.S. auto sales in August are on pace to show a 12 percent rise from last year, market analysts J.D. Power & Associates and LMC Automotive said on Thursday.

Total new vehicle sales should be nearly 1.5 million in August, a 12 percent increase from 2012, which translates to a seasonally adjusted annualized rate of 16 million, J.D. Power and LMC said in a joint statement.

The August annualized monthly sales rate, if realized, would be the highest since November 2007, and if the actual number of vehicles sold reaches nearly 1.5 million, it would be the best sales month since May 2007, they said.

"This strong selling environment is occurring when consumers are spending more on new vehicles than any month on record, which is a further indication of the underlying strength of the sector," said John Humphrey of the automotive practice at J.D. Power.

LMC said it is maintaining its full-year 2013 sales forecast of 15.6 million new vehicles sold, up from 14.5 million last year.

"The U.S. auto recovery seems to be operating on auto pilot, a welcome stage of stability at a higher pace," said Jeff Schuster, senior vice president of forecasting at LMC Automotive.

Schuster said auto sales will continue to remain strong "well into 2014."

North American light-vehicle production through July was up 4 percent from last year as the industry continues to manage a lean supply-to-demand ratio, J.D. Power and LMC said.

Among individual automakers, the highest production growth this year has been made by South Korean sister companies Hyundai Motor Co (005380.KS) and Kia Motors Corp (000270.KS), which are up 14 percent. Almost all of the higher output comes from two Hyundai models, the Elantra sedan and the Santa Fe crossover, the analysts said.

Ford Motor Co (F.N) North American production is up 13 percent this year, largely on more Escape crossover and Explorer SUV output.

General Motors Co (GM.N) production is down 3 percent in the region and output by Fiat-Chrysler (FIA.MI) is relatively flat.

North American production for European brands is down 2 percent through July, according to J.D. Power and LMC.

(Reporting by Bernie Woodall; Editing by Gerald E. McCormick and Eric Beech)

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U.S. factory activity increases in August: Markit

A view of the jet assembly line at a Cessna manufacturing plant in Wichita, Kansas March 12, 2013.

Credit: Reuters/Jeff Tuttle

NEW YORK | Thu Aug 22, 2013 9:08am EDT

NEW YORK (Reuters) - U.S. manufacturing activity hit a five-month high in August as hiring picked up and new orders increased at their fastest pace since January, an industry report showed on Thursday.

Financial data firm Markit said its "flash," or preliminary, U.S. Manufacturing Purchasing Managers Index rose to 53.9, its best showing since March, and just below economists' forecast of 54.0. The index stood at 53.7 in July. A reading above 50 indicates expansion.

Overall output, however, declined to 53.4 from 54.8, its slowest rate of growth in three months, suggesting the pace of overall U.S. economic expansion remains "disappointingly sluggish," said Markit chief economist Chris Williamson.

"Hopefully the faster growth of new orders seen during August will translate into increasingly strong production gains in coming months, and also boost hiring," he added.

New orders rose to 56.5, a seven-month high, from 55.5 in July, and firms took on new workers at their fastest pace in four months. But Williamson said the manufacturing sector "is still barely contributing to nonfarm payroll growth."

U.S. employers slowed their pace of hiring last month but the jobless rate declined. Global investors, however, still expect the Federal Reserve will start winding down its massive stimulus program this year, with many betting the central bank could slow its monthly bond purchases as soon as September.

Markit's "flash" reading is based on replies from about 85 percent of the U.S. manufacturers surveyed. A final reading will be released on the first business day of the following month.

(Reporting By Steven C. Johnson; Editing by Chris Reese)

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U.S. consumer sentiment weakens in August

A shopper looks through the produce section in a newly opened Walmart Neighborhood Market in Chicago, September 21, 2011.

Credit: Reuters/Jim Young

NEW YORK | Fri Aug 16, 2013 10:11am EDT

NEW YORK (Reuters) - U.S. consumers, bracing for higher interest rates and slightly slower economic growth, were a bit less optimistic in August as sentiment retreated from last month's six-year high, a survey released on Friday showed.

The Thomson Reuters/University of Michigan's preliminary reading on the overall index on consumer sentiment slipped to 80.0 from 85.1 in July, the highest since July 2007.

August's result was well below the 85.5 reading expected by economists.

Consumers' view of current economic conditions showed the biggest decline, and most expected the pace of growth to ease slightly. However, these changes were not large enough to upend "the prevailing view that the economic expansion will continue," survey director Richard Curtin said in a statement.

"Perhaps the most important recent changes have been the increase in home values as well as the jump in the numbers that expect interest rate increases during the year ahead," he added.

Long-term interest rates have risen by more than a full percentage point over the last three months on the view that the Federal Reserve will start scaling back as soon as next month its hefty support for the economy.

That has pushed up mortgage rates, which could sap some of the strength from a housing recovery that has been pushing prices higher for more than a year.

On Thursday, wary investors sold both stocks and bonds in expectation of higher rates, sending benchmark 10-year Treasury yields to a two-year high above 2.8 percent.

The survey's barometer of current economic conditions fell to 91.0 from 98.6. The gauge of consumer expectations slipped to 72.9 from 76.5.

Upper-income households said they anticipated slightly slower income gains in the year ahead due to future inflation, according to the survey.

However, the medium- and long-term inflation outlook overall held steady, with the one-year inflation expectation stable at 3.1 percent and the five-to-10-year inflation outlook unchanged at 2.8 percent.

(Reporting By Steven C. Johnson; Editing by Chris Reese)

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U.S. consumer sentiment weakens in August

A shopper looks through the produce section in a newly opened Walmart Neighborhood Market in Chicago, September 21, 2011.

Credit: Reuters/Jim Young

NEW YORK | Fri Aug 16, 2013 10:11am EDT

NEW YORK (Reuters) - U.S. consumers, bracing for higher interest rates and slightly slower economic growth, were a bit less optimistic in August as sentiment retreated from last month's six-year high, a survey released on Friday showed.

The Thomson Reuters/University of Michigan's preliminary reading on the overall index on consumer sentiment slipped to 80.0 from 85.1 in July, the highest since July 2007.

August's result was well below the 85.5 reading expected by economists.

Consumers' view of current economic conditions showed the biggest decline, and most expected the pace of growth to ease slightly. However, these changes were not large enough to upend "the prevailing view that the economic expansion will continue," survey director Richard Curtin said in a statement.

"Perhaps the most important recent changes have been the increase in home values as well as the jump in the numbers that expect interest rate increases during the year ahead," he added.

Long-term interest rates have risen by more than a full percentage point over the last three months on the view that the Federal Reserve will start scaling back as soon as next month its hefty support for the economy.

That has pushed up mortgage rates, which could sap some of the strength from a housing recovery that has been pushing prices higher for more than a year.

On Thursday, wary investors sold both stocks and bonds in expectation of higher rates, sending benchmark 10-year Treasury yields to a two-year high above 2.8 percent.

The survey's barometer of current economic conditions fell to 91.0 from 98.6. The gauge of consumer expectations slipped to 72.9 from 76.5.

Upper-income households said they anticipated slightly slower income gains in the year ahead due to future inflation, according to the survey.

However, the medium- and long-term inflation outlook overall held steady, with the one-year inflation expectation stable at 3.1 percent and the five-to-10-year inflation outlook unchanged at 2.8 percent.

(Reporting By Steven C. Johnson; Editing by Chris Reese)

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