MARKET MOVER - BNP PARIBAS - Investment Services India
MARKET MOVER - BNP PARIBAS - Investment Services India
MARKET MOVER - BNP PARIBAS - Investment Services India
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Key Data Preview<br />
Chart 7: UK CIPS Manufacturing vs FMCI<br />
Source: Reuters EcoWin Pro<br />
Sep (f) Aug Jul Jun<br />
53.0 54.3 56.9 57.5<br />
Key Point:<br />
We expect the CIPS to fall again in September, with<br />
further downside potential in the coming months.<br />
<strong>BNP</strong> Paribas Forecast: Down Again<br />
UK: CIPS Manufacturing (September)<br />
Release Date: Friday 1 October<br />
We expect the manufacturing sector CIPS to continue to<br />
fall in September, by 1.3 points to 53.0; this would be the<br />
lowest since November 2009. Prior to August, the CIPS<br />
had clearly topped out but had managed to avoid the falls<br />
that had been experienced in other major economies. That<br />
came to an end in August, when the index fell by 2.6<br />
points.<br />
The fall was consistent with the tightening in financial and<br />
monetary conditions highlighted by our FMCI (chart). The<br />
same relationship points to further downside in September.<br />
Furthermore, the orders-inventories balance tends to<br />
provide a guide to future trends in the output component<br />
and indeed the headline index. At current levels, this<br />
relationship points to a sub-50 reading on the headline<br />
CIPS over the next three months.<br />
In combination with the OECD leading indicator, the drop in<br />
the CIPS so far and the likelihood that this trend continues<br />
points to a contraction in output by the end of the year.<br />
Output never caught up with the peaks in the survey<br />
indicators, which probably highlighted relief that the<br />
recession was over. The drop in surveys is partly a<br />
correction of that over-optimism but is also likely to reflect a<br />
genuine slowing in hard output.<br />
Chart 8: US Confidence vs Consumption<br />
Source: Reuters EcoWin Pro<br />
% m/m Aug (f) Jul Jun May<br />
Personal Income 0.3 0.2 0.0 0.3<br />
Consumption 0.3 0.4 0.0 0.1<br />
Core PCE Prices 0.1 0.1 0.0 0.1<br />
<strong>BNP</strong> Paribas Forecast: Modest Gains<br />
US: Personal Income & Spending (August)<br />
Release Date: Friday 1 October<br />
Personal consumption is forecast to rise 0.3% in August<br />
after a 0.4% gain in July as rising gasoline prices and a<br />
moderate gain in core sales spurred by back-to-school<br />
spending more than offset a decline in auto sales. Looking<br />
through the gain in prices, our forecast would imply a<br />
relatively subdued 0.1% increase in real spending as<br />
consumers remain cautious about allocating their<br />
purchasing power.<br />
Personal income is forecast to rise by 0.3% after a 0.2%<br />
gain a month prior as the increase in hours worked and<br />
solid gain in average hourly earnings should support wage<br />
and salary income.<br />
The core PCE price index is expected to rise 0.1% despite<br />
the flat reading on core CPI as the weakness in the CPI<br />
reading was driven by a softening in owner’s equivalent<br />
rent (this is weighted less heavily in the PCE measure).<br />
Our forecast would leave the annual rate steady at 1.4%.<br />
Key Point:<br />
We expect modest gains in income and spending and<br />
a steady reading for core inflation.<br />
Market Economics 23 September 2010<br />
Market Mover<br />
61<br />
www.GlobalMarkets.bnpparibas.com