Fisher Investments Reviews: Last Week in Markets—July 31 – August 4

In the US, July nonfarm payrolls increased by 187,000, while the July unemployment rate ticked down to 3.5%. The final July S&P Global Manufacturing and Services Purchasing Managers’ Indexes (PMIs) were 49.0 and 52.3, respectively. PMI readings above 50 indicate expansion. Strong services have helped the global economy expand during weak manufacturing stretches before, and we think they can do so today—something markets see even if people don’t. For more, please see our 8/3/2023 commentary, “Services Vs. Manufacturing: Global Purchasing Managers’ Indexes Show the Divide.”

In the eurozone, the final July HCOB Global Manufacturing and Services PMIs were 42.7 and 50.9, respectively. The first estimate of Q2 2023 GDP showed expansion of 0.3% q/q and 0.6% y/y, higher than anticipated. July flash headline consumer prices increased 5.3% y/y while flash core consumer prices (excluding food and energy costs) rose 5.5% y/y. June retail sales fell 1.4% y/y and 0.3% m/m. The June unemployment rate was unchanged from the previous reading at 6.4%. In the UK, the final July S&P Global/CIPS Manufacturing PMI was 45.3, exceeding previous estimates, while the Services PMIs was 51.5, matching estimates. June money supply (M4) rose 0.1% y/y and fell 0.1% m/m. The Bank of England raised interest rates by 25 basis points, matching consensus expectations and bringing their official bank rate to 5.25%.

In Japan, the final July Jibun Bank Manufacturing and Services PMIs were revised down to 49.6 and 53.8, respectively. Preliminary June industrial production rose 2.0% m/m and fell 0.4% y/y, missing expectations. June retail sales fell 0.4% m/m, but rose 5.9% y/y. The June unemployment rate fell slightly to 2.5%. In China, the final July Markit/Caixin Manufacturing and Services PMIs were 49.2 and 54.1, respectively.

The Week Ahead:

The US and China report July consumer prices. The UK reports the first estimate of Q2 2023 GDP and June manufacturing and industrial production. Japan and China report July money supply (M2). China reports July trade data.

Source for all data cited is FactSet. This update constitutes the general views of Fisher Investments and should not be regarded as personalized investment advice. No assurances are made we will continue to hold these views, which may change at any time based on new information, analysis or reconsideration. In addition, no assurances are made regarding the accuracy of any forecast made herein. Global equities are represented by the MSCI World Index. The MSCI World Index measures the performance of selected stocks in 23 developed countries and is presented net of dividend withholding taxes and uses the maximum rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. Past performance is no guarantee of future results. A risk of loss is involved with investments in stock markets.