Value of Canada building permits down 3.0% in July - Reuters News

Aug 31 (Reuters) - The value of Canadian building permits fell by 3.0% in July from June, Statistics Canada said on Monday.

The residential sector saw lower intentions for multi-family component, while the commercial component led the increase in the non-residential sector. The value of building permits were up in seven provinces, led by Ontario.

Month on month (%)

                    Jul  Jun(rev)  Jun(prev)

Total             -3.0    +5.7      +6.2

Residential       -6.2    +8.3      +7.0

Nonresidential    +3.3    +0.8      +4.6

NOTE: All figures are seasonally adjusted.

Canada July producer prices up 0.7% on energy - Reuters News

Aug 31 (Reuters) - Producer prices in Canada rose by 0.7% in July from June on higher prices for energy and petroleum products as well as primary non-ferrous metals, Statistics Canada said on Monday.

The increase followed a downwardly revised 0.2% increase in June. Raw materials prices were up 3.0% in July, and were down 12.1% on the year.

INDUSTRIAL PRODUCT PRICES (pct change)

                        Month-on-month             Year-on-year

                   Jul   Jun(rev)  Jun(prev)    Jul   Jun(rev)  Jun(prev)

total            +0.7    +0.2      +0.4       -2.3    -3.3      -3.1

ex energy/petrol +0.1    -1.2      -1.0       +1.6    +0.9      +1.1

RAW MATERIALS PRICE INDEX (pct change)

                        Month-on-month             Year-on-year

                   Jul   Jun(rev)  Jun(prev)    Jul   Jun(rev)  Jun(prev)

total            +3.0    +7.5      +7.5      -12.1   -13.5     -13.5

ex crude energy  +1.4    -0.2      -0.3       +2.2     0.0      -0.1

NOTE: Analysts surveyed by Reuters had expected a 0.7% increase in industrial prices in July from June.

China's slower factory growth eclipsed by robust services in boost to economic recovery - Reuters

August manufacturing PMI at 51 vs July's 51.1 (Reuters poll 51.2)

Production growth eases but new orders up

Declines in new export orders slow

Small firms continue to suffer

Non-mfg PMI for August 55.2 vs July's 54.2

Services sector rebounds, construction dips

BEIJING, Aug 31 (Reuters) - China's factory activity grew at a slower pace in August as floods across southwestern China disrupts production, but the services sector expanded at a solid rate in a boost to the economy as it continues to recover from the coronavirus shock.

The world's second-biggest economy has largely managed to bounce back from the health crisis, though intensifying Sino-U.S. tensions over a range of issues and the global demand outlook remain a risk factor.

The official manufacturing Purchasing Manager's Index (PMI) fell slightly to 51 in August from 51.1 in July, data from the National Bureau of Statistics showed on Monday. It remained above the 50-point mark that separates growth from contraction on a monthly basis.

Analysts had expected it to pick up a touch to 51.2.

China's vast industrial sector is steadily returning to the levels seen before the pandemic paralysed huge swathes of the economy, as pent-up demand, stimulus-driven infrastructure expansion and surprisingly resilient exports propel a recovery, but the recovery remains uneven.

A sub-index for the activity of small firms stood, however, at 47.7 in August, down from July's 48.6, with over half of them reporting a lack of market demand and more than 40% of them reporting financial strains, Zhao Qinghe, a senior statistician with the NBS, said in a separate statement.

"In addition, some companies in Chongqing and Sichuan reported an impact from the heavy rains and floods, resulting in a prolonged procurement cycle for raw materials, reduced orders and a pullback in factory production."

The official PMI, which largely focuses on big and state-owned firms, also showed the sub-index for new export orders stood at 49.1 in August, improving from 48.4 a month earlier and suggesting a bottoming out in the contractionary trend after COVID hit.

"The growth engine is now clear. Overseas demand will only pick up slowly and travel restrictions will only be relaxed if COVID-19 cases subside overseas. Until then China will rely more on its own for economic growth," said Iris Pang, Greater China chief economist at ING.

Economic indicators ranging from trade to producer prices all suggest a further pick up in the industrial sector. Profits at China's industrial firms last month grew at the fastest pace since June 2018, data showed on Thursday.

 

SERVICES SHINE

Activity in the construction sector, a powerful domestic growth driver, also eased in August, likely due to the floods in Southern China. But analysts are confident that as the torrential rains recede, Beijing's infrastructure push - on the back of accommodative policies - would further bolster growth.

The official non-manufacturing PMI, which includes services and construction sectors, rose to 55.2 from 54.2 in July, the NBS survey showed.

Investment bank HSBC expects China's economy would grow by 5.4% in the third quarter year-on-year, followed by a 6.2% expansion in the fourth quarter, returning China's growth to pre-COVID levels.

But some analysts fear that the recovery could stall, hurt by rising tensions between Washington and Beijing and as another wave of local infections returns in the winter. Moreover, the continued rise in the number of COVID-19 cases across many countries, led by India and the United States, remain a risk to the outlook.

The economy, which grew 3.2% in the second quarter year-on-year, is set to expand 2.2% this year - the weakest in over three decades. (Full Story) (Full Story)

Capital Economics senior China economist Julian Evans-Pritchard said the services sector uptick suggested an encouraging broadening out of the recovery.

"This is consistent with our view that an investment-led rebound would eventually also shore up consumer sentiment and household spending, keeping the overall economic recovery on track."

VAT cut pushes German inflation into negative territory - Reuters News

Harmonised consumer price index drops to -0.1% in August

Government's stimulus measures carry deflationary risks

By Michael Nienaber

BERLIN, Aug 31 (Reuters) - German annual consumer prices fell for the first time in more than four years in August due to a VAT cut as part of the government's stimulus push to help Europe's largest economy recover from the coronavirus shock, data showed on Monday.

German consumer prices, harmonised to make them comparable with inflation data from other European Union countries, fell 0.1% year-on-year after stagnating in the previous month, the Federal Statistics Office said.

This compared with a Reuters forecast for 0.0% and was the first negative reading since May 2016.

"The inflation rate is influenced, among other things, by the VAT cut that came into effect on July 1, 2020," the office said in a statement.

Germany's stimulus package includes a cut in VAT - value added tax - for regular goods to 16% from 19% and for food and some other goods to 5% from 7% from July 1 until Dec. 31. The reduction is estimated to cost the federal government up to 20 billion euros ($24 billion).

The government hopes that its rescue and stimulus measures will help companies and consumers recover more quickly from the coronavirus shock which plunged the economy into its deepest recession on record in the second quarter. (Full Story)

ING economist Carsten Brzeski said the VAT cut was most visible in prices for food and clothing, while inflation for services remained almost stable.

While higher unemployment and weak pricing power for companies generally suggest deflationary trends during the pandemic, monetary and fiscal stimulus eventually speak in favour of more inflationary pressure, Brzeski said.

But the German inflation data showed that at least "for the time being, the deflationary threat is clearly more pressing than any inflationary one", Brzeski added.

The European Central Bank has a target of keeping inflation close to but below 2% in the euro zone.

ECB board member Isabel Schnabel told Reuters in an interview published on Monday that the central bank has no reason for now to add to its stimulus measures as disruptions related to the recent surge in coronavirus infections were already factored into its policy. (Full Story)

On the month, harmonised prices fell by 0.2%, the preliminary data showed. A Reuters poll had predicted an unchanged reading, the preliminary data showed.