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Reports Reveal Weak U.S. Manufacturing Figures, Inflation in The UK Surges & Slowing Chinese Retail Sends Hang Seng index Down

U.S. indices higher despite weak manufacturing figures

The Dow Jones and the benchmark S&P 500 were trading higher on Tuesday, as it was revealed that U.S. factory production had slowed.

Figures from the Federal Reserve showed that manufacturing output in the United States only increased by 0.2% last month, versus the 0.4% expected.

This comes in the aftermath of Hurricane Ida, which many believe was the main reason for the slowdown, as several factories were forced to shut, in response to the storms.

What type of recovery are we expecting for manufacturing?
In a study done by done by Deloitte they stated: Before the pandemic hit, the manufacturing industry was working to regain the momentum it had reached after the 2008 recession. However, after the first wave of pandemic-driven shutdowns, segment recoveries for various manufacturers have been uneven, the recovery may take longer to reach pre-pandemic levels.

Add this to the fact that factories haven’t been able to operate as normal around the world.

Despite the short-term decline, it was shown that factory production is 1.0% above its pre-pandemic level, which is likely due to the manufacturers capitalising on pent up demand from earlier this year.

As a result, the blue-chip Dow Jones was trading 0.72% higher, with the S&P 500 also up.

FTSE 100 falls as UK inflation surges

The FTSE 100 was trading lower in today’s session, as it was reported that inflation rates in the UK rose in August.

Consumer prices in Britain rose to their highest levels in 9-years, with figures from the Office for National Statistics showing a 3.2% surge (YoY).

This was the biggest annual rise in inflation since March 2012 and an increase from the Bank of England’s 2.0% target, which was recorded in July.

💡 The Delta Variant and its effect on the recovery
As fatalities rise with the now dominant delta variant, people are becoming weary of going out. Hospitality and leisure related industries have been the hardest-hit. Recovery in these areas will come at a slower pace

Despite this, the BOE maintains its expectation for rates to average out at 2% early in 2022, despite warning that inflation could climb to as high as 4% by the end of this year.

It is believed that the short-term rise would come due to bottle-necks caused by not only the COVID-19 pandemic, but also Brexit.

London’s FTSE 100 closed 0.25% today.

Chinese retail sector slowing down

China was also a participant in providing weaker than expected economic data on Wednesday, as it was revealed that both industrial production and consumer spending had fallen.

Figures from the world’s second largest economy showed that retail sales were up 2.5% in August, from the same period a year ago.

The discrepancy comes as it was forecasted that spending would rise by 7.0%, however the declining sales comes in the aftermath of rising cases of the Delta variant.

💡 The Delta Variant and its effect on the recovery
As fatalities rise with the now dominant delta variant, people are becoming weary of going out. Hospitality and leisure related industries have been the hardest-hit. Recovery in these areas will come at a slower pace

Further data also showed Industrial production was slowing, coming in at 5.3% August, after increasing by 6.4% in July.

The Hang Seng index was down 1.84% on the data.

Quote of the day – “I’m always thinking about losing money as opposed to making money. Don’t focus on making money, focus on protecting what you have”

– Paul Tudor Jones

Eliman Dambell

Senior Market Analyst


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