Europe:
Euro Factories Add Jobs in Struggle to Keep Up With Orders
Euro-area factories are scrambling to add staff as burgeoning orders stretch capacity. A Purchasing Managers Index for the region’s manufacturing industry rose to 58.1 in September from 57.4 the previous month, London-based IHS Markit said on Monday. That compares with a preliminary reading of 58.2 and is the highest level in more than six and a half years. A gauge for employment rose at the fastest pace since the survey began in 1997. The currency bloc’s economy is on track to expand 2.2 percent this year, the strongest pace in a decade as global trade, central bank stimulus and political risks all combine to support growth. “The euro-zone manufacturing boom kicked into an even higher gear in September,” said Chris Williamson, chief economist at IHS Markit. “Surging order-book growth has encouraged manufacturers to take on extra staff at a rate never previously seen in the 20-year history of the PMI survey. Despite this expansion of capacity, backlogs of incomplete work built up at a faster rate, suggesting that the hiring upturn has plenty more room to run.” Unemployment was 9.1 percent in August, according to a separate report from Eurostat. Economists had predicted a drop to 9 percent. Factory activity expanded in all major European countries, IHS Markit said, led by Germany and the Netherlands. Greece enjoyed its strongest growth since June 2008.
Asia:
Asian factories rev up in September ahead of year-end spending spree
Factories in Asia’s largest economies cranked up activity in September as a synchronized upswing in growth globally pointed to solid consumption of manufactured goods heading into the lucrative end-of-year shopping season. However, pockets of weakness in regional economies are likely to keep Asian central banks slanted toward more accommodative monetary policy, even as their Western counterparts move to scale back stimulus. China’s central bank on Saturday cut the amount of cash that some banks must hold as reserves for the first time since February 2016 in a bid to encourage more lending to struggling smaller firms and energize its lackluster private sector. The world’s second-largest economy has defied expectations for a slowdown this year, growing at a strong clip in the first half thanks to a construction boom. Beijing’s latest easing comes ahead of a key party gathering this month. “It’s a solid backdrop for manufacturing in the region as we head toward the big shopping season,” said Rob Carnell, Asia’s head of research at ING. That sentiment was backed by an official Purchasing Managers’ Index from China’s vast manufacturing sector, which showed activity last month grew at the fastest clip since 2012 on solid demand.
U.S.:
Dollar surges as Fed talk boosts Treasury yields
The dollar soared on Monday as U.S. Treasury yields hit their highest level since mid-July, while Spanish borrowing costs rose and stocks fell as a violent police crackdown on an independence vote in Catalonia rattled investors. Other European bourses rose and Wall Street looked set to open up 0.2 percent, according to index futures. Firming expectations the U.S. Federal Reserve will raise interest rates for a third time this year and talk of a potentially more hawkish successor to Fed Chair Janet Yellen combined to push Treasury yields higher. Ten-year yields topped 2.37 percent, up 4 basis points on the day, pushing the dollar half a percent higher against a basket of currencies. “The dollar is stronger on higher Treasuries, and the market is seeming to play the idea that the Fed might become more hawkish when we look at the possible candidates for the board of directors,” said Antje Praefcke, FX strategist at Commerzbank. Treasury yields later pulled back – the 10-year yield last stood at 2.34 percent, up just 1.3 basis points on the day, but the dollar index retained most of its gains. The euro fell 0.7 percent to $1.1733, though traders said the Catalan referendum had only a limited impact on the single currency.
