Jueves 01/08/19 PMI, ISM

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ISM manufacturing index falls to 51.2 in July; construction spending down 1.3% in June
PUBLISHED 4 HOURS AGO UPDATED 3 HOURS AGO
REUTERS
The U.S. manufacturing sector expanded in July, but the pace of growth decelerated to its weakest in nearly three years stemming from a broad decline in activities from the month before, an industry report released on Thursday showed.
The Institute for Supply Management (ISM) said its index of national factory activity fell to 51.2, the lowest reading since August 2016.
U.S. construction spending fell by the most in seven month in June as investment in private construction projects tumbled to a more than 1.5-year low.
July ISM manufacturing index misses expectations

U.S. manufacturing activity slowed to a near three-year low in July and a measure of new orders received by factories rebounded slightly, as the negative effects of a bitter trade war between the United States and China lingered.
Other data on Thursday showed the number of Americans filing for unemployment benefits rose last week, while construction spending fell in June as investment in private construction projects tumbled to its lowest level in 1-1/2 years.
The slowdown in factory activity and accompanying weak business investment have caught the attention of Federal Reserve officials. The U.S. central bank on Wednesday cut interest rates for the first time since 2008, to insure against downside risks to the economy from trade tensions and slowing global growth.

Fed Chairman Jerome Powell told reporters during a news conference the preemptive monetary policy easing was "not the beginning of a long series of rate cuts." Powell also noted that "the investment and manufacturing part of the economy is more or less not, it's not growing much."
"We hope to help that with this rate cut," he said.
The Institute for Supply Management (ISM) said its index of national factory activity slipped to 51.2 last month, the lowest reading since August 2016, from 51.7 in June. It was the fourth straight monthly decline in the index.
A reading above 50 indicates expansion in the manufacturing sector, which accounts for about 12 percent of the U.S. economy. Economists polled by Reuters had forecast the ISM index would rise to 52.0 in June.
The ISM said while businesses expressed less concern about the U.S.-China trade turbulence, "trade remains a significant issue."
Washington's trade fight with Beijing has hurt business sentiment. That, together with disruptions to supply chains caused by import tariffs, is weighing on manufacturing.
Manufacturing is also taking a hit from an inventory overhang, which has resulted in businesses placing fewer orders with manufacturers. A reduction in the production of Boeing's MAX 737 aircraft, which was grounded in March after two fatal plane crashes in five months, is also a drag on activity.
The ISM survey's new orders measure rebounded to a reading of 50.8 last month from 50.0 in June. A gauge of factory employment dropped to 51.7 from a reading of 54.5 in June.
The dollar firmed against a basket of currencies as investors continued to digest Wednesday's rate decision and Powell's comments. U.S. Treasury prices rose. Stocks on Wall Street were trading higher.
Labor market resilient

In a separate report on Thursday, the Labor Department said initial claims for state unemployment benefits rose 8,000 to a seasonally adjusted 215,000 for the week ended July 27. Economists had forecast claims increasing to 214,000 in the latest week.
The labor market has remained resilient even as the economy has shifted into lower gear, mainly as the stimulus from last year's $1.5 trillion tax cut package fades. The health of the labor market, which so far does not appear to have been impacted by the U.S-China trade fight could help to determine whether the Federal Reserve will cut interest rates again this year.
The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 1,750 to 211,500 last week.
The claims data has no bearing on July's employment report, which is scheduled to be released on Friday. According to a Reuters survey of economists, nonfarm payrolls likely increased by 164,000 jobs in July after surging by 224,000 in June.
Job gains averaged 172,000 per month in the first half of this year, below the monthly average of 223,000 in 2018, mainly because of a shortage of qualified workers.
The pace of job gains, however, remains above the roughly 100,000 per month needed to keep up with growth in the working-age population. The unemployment rate is expected to have held steady at 3.7% in July.
"The trend in job growth likely has slowed to some degree," said Daniel Silver, an economist at JPMorgan in New York. "But the claims data signal that any softening in the labor market is likely to be modest and don't point to any sort of substantial downshift in activity."
In a third report on Thursday, the Commerce Department said construction spending dropped 1.3% in June, the biggest decline in seven months, after falling 0.5% in May.

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General Motors shares up after earnings beat, company sees stronger second half
PUBLISHED 7 HOURS AGO UPDATED 3 HOURS AGO

Elijah Shama
CNBC.COM
General Motors beats analyst estimates for the second quarter despite a massive drop in income in China.
The company reports revenue of $36.1 billion.
Shares of GM rise more than 7% over the last 12 months and are up more than 21% since the beginning of the year.
General Motors delivers Q2 earnings beat on top and bottom lines
A General Motors' worker assembles a Cadillac ATS on the assembly line at the General Motors Lansing Grand River Assembly Plant.
General Motors shares are up 2.6% Thursday after second-quarter earnings topped analyst estimates, as sales of more profitable pickup trucks and crossovers offset weaker sales in China.
Here's what GM reported against average analysts' estimates compiled by Refinitiv:
Adjusted EPS: $1.64 vs. $1.44, estimated
Revenues: $36.1 billion vs. $35.98 billion, estimated

"We had a solid second quarter and expect the second half of the year to be stronger than the first half. Our confidence in our full-year outlook is based on our strong full-size truck rollout, other key launches and ongoing cost savings," said CFO Dhivya Suryadevara.
GM reported second-quarter net income of $2.41 billion, or $1.66 per share, compared with $2.39 billion, or $1.66 per share, a year earlier. Excluding one-time items, GM earned $1.64 per share, solidly outpacing analyst estimates of $1.44 per share.
Net revenue fell 1.9% to $36.1 billion from $36.8 billion.
In North America, the company's adjusted earnings before interest and taxes rose to $3 billion from $2.7 billion a year ago.
The company delivered 747,000 vehicles in the U.S. Crossover sales rose 17% year over year and a second-quarter record. Models like the Chevrolet Equinox and Traverse both set records while sales of every Buick crossover was up year-over-year. The GMC Acadia also had its best first half in sales ever.
In the U.S., GMC saw sales rise almost 11% to 153,000 from 138,000 a year ago.
Light-duty pickup trucks also saw their market share grow with stalwarts like the Chevy Silverado and GMC Sierra also posting double-digit gains year-over-year for the second straight quarter.
Market share in North America fell to 15.8% from 16.1% during the second quarter last year.
Vehicle sales in other parts of North America including Mexico and Canada saw sales fall 16.23%.
However, income from China dropped 60.3% over the same quarter last year, with the Detroit automaker reporting income of $235 million, down from 2018's record income of $592 million. GM China also reported sales that were down 12%, citing economic slowdowns in the country as a factor.
"We do expect China to be down year over year," Suryadevara said in an interview with CNBC.
GM China expects to benefit from about 20 new vehicle launches, the majority of which will go on sale later in the year and consist of sport utility vehicles.
GM reaffirmed its full-year forecast for earnings per share of $6.50 to $7.00 per share.
"This was a very good quarter driven by trucks, SUVs, and new products with the company facing pressures internationally especially in China," said Jeff Windau an analyst at Edward Jones.
The company is also expecting its new Corvette supercar to be a hit. It said it's increasing production of the mid-engined supercar, adding a second shift and more than 400 hourly jobs at its Bowling Green Assembly plant in Kentucky.
GM said it will have expanded the amount of highway that is compatible to its Super Cruise driver assistance feature to more than 200,000 total miles by the end of the year.
The company recently scrapped its 2019 launch of its Cruise autonomous ride-share service. The company said it will continue to expand its testing and validation miles over the balance of the year.
In April, GM said vehicle sales fell 7% in the first quarter from the same period a year ago, but that buyers were opting for the company's more expensive SUVs and pickup trucks. GM plans to launch more full-size pickups during the second half of 2019, with two new heavy-duty pickups from Chevrolet and GMC.
GM has recently cut more than 14,000 jobs at factories in the U.S. and Canada after it idled factories that produced slow-selling vehicles. The company is also shifting focus toward self-driving and electrified vehicles such as the Chevy Bolt EV.
Shares of GM have risen more than 7% over the last 12 months and are up more than 21% since the beginning of the year.
Click here for GM's full earnings release.
(Correction: An earlier version of this story misstated several numbers. GM expe

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Trump to Impose 10% Tariff on Additional $300 Billion in Chinese Goods

President says next round of trade talks with Beijing is still on track for September

By Vivian Salama and William Mauldin
Updated Aug. 1, 2019 2:33 pm ET

President Trump imposed additional tariffs, but said negotiators planned to resume their trade talks as scheduled next month. Photo: Tom Brenner/Bloomberg News
WASHINGTON—President Trump said that the U.S. would impose 10% tariffs on an additional $300 billion in Chinese goods and products beginning on Sept. 1, after trade talks this week failed to yield any significant results.

“China agreed to...buy agricultural products from the U.S. in large quantities, but did not do so,” he said. “Additionally, my friend President Xi said that he would stop the sale of Fentanyl to the United States—this never happened, and many Americans continue to die.”

Unlike previous rounds of tariffs, which have focused largely on industrial goods, the $300 billion tranche is set to include a host of consumer products, from electronics and cellphones to apparel.

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The tariffs would include Apple Inc.’s iPhones unless such phones are granted an exemption or otherwise excluded from the final list. Mr. Trump said in July that Chinese-made parts for Apple’s Mac pro computers won’t get exemptions.

The tariffs would also affect practically all the groups of products not hit previously, with the exception of select categories, such as medicines.

Stocks, bond yields and oil prices dropped following Mr. Trump’s announcement. The Dow Jones Industrial Average erased a rebound of more than 300 points, oil dropped 6% and the yield on the benchmark 10-year U.S. Treasury note plumbed fresh 2019 lows. The blue-chip index dropped 60 points, or 0.2%, to 26800. The S&P 500 fell 0.4% and the technology-heavy Nasdaq Composite slid 0.4%.

U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin met this week with Chinese Vice Premier Liu He in Shanghai after a monthslong freeze in trade discussions.

Apart from small steps, however, expectations were low for making significant progress in resolving a trade dispute that has rattled global markets and seen both sides slap punitive tariffs on about half the more than $600 billion in goods they trade.

Speaking to the Fox Business Network earlier Thursday, Mr. Trump’s China trade adviser Peter Navarro indicated that the president sees an economic benefit to tariffs.

“Tariffs are good. Tariffs are raising revenues,” he said. “They’re helping defend our steel and aluminum industries. They’re helping us get China to the negotiating—do you think China would be at the negotiating table right now?”

(More to come)

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