Weekly Economic Review (September 30 - October 4, 2013)
Government shutdown and looming debt ceiling deadline dominated the markets this week — Global stocks ended the week in the red amid political dysfunction and dire warnings over US default threat.
US government shutdown delayed economic data such as non-farm payrolls, a key indicator in Federal Reserve deliberations on when to taper its bond purchases. The postponement however had no noticeable market impact. In the absence of key economic data, investors maintained focus on activities in Washington.
Over the upcoming weeks the economic sabotage through congressional shutdown would become more evident and may reduce market appetite for risky investments. But the bigger issue markets currently face is the potential risk of default. Though chances of a default are slim, there is no denying that the repercussions if it happens could be literally catastrophic and could put a serious dent in US economic recovery.
Following is an economic review for the week September 30 - October 4, 2013.
Monday, September 30
China Manufacturing PMI (final reading):
China's manufacturing activity in September showed a small increase, supported mainly by rising overseas demand, adding to evidence that the Chinese economy continues to recover, though at a more modest pace than earlier data indicated (50.2 vs. preliminary reading of 51.2).
Canada GDP (m/m):
GDP was reported 0.6% higher on a monthly basis, beating expectations for a 0.5% expansion and an improved release following the 0.5% GDP decline reported in June, which was the biggest monthly contraction since 2009. The economy expanded 1.4% since July 2012.
Tuesday, October 1
UK Manufacturing PMI:
Growth in Britain's manufacturing sector eased in September from a two-year high in August (56.7 in September vs. 57.1 in August), mainly due to less robust export orders.
EU Unemployment Rate:
Unemployment rate in the Euro zone came in at 12% in August, unchanged from July.
ISM Manufacturing PMI:
ISM Manufacturing PMI increased 0.5% points to 56.2%, and is now at the highest level for the year 2013.
Wednesday, October 2
ADP Non-Farm Employment Change:
Payroll processing firm ADP said non-farm private employment rose by a seasonally adjusted 166K in September, below expectations for an increase of 180K.
US Crude Oil Inventories:
US crude oil inventories increased 2.6 million barrels to 358.3 million barrels last week, and lie within the upper range for this time of year.
Thursday, October 3
Great Britain Current Account:
Retail sales across Europe showed signs of resurgence, after sales growth in August topped the positive performance reported in July. Sales across the 17-member Euro zone rose by 0.7% month-on-month, while sales in the 28-member EU grew by 0.4%. This compared to a revised 0.5% rise in July (for both areas).
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