LGT Navigator

US business activity stalls as Europe continues contraction

Purchasing Managers’ Indices (PMI) released at the end of the week showed flatlining US economic activity while business activity in Europe contracted again in September. Markets nevertheless managed to stabilize to end the week, despite US equity funds suffering their largest outflows in four weeks during the seven days ending September 20. Asia markets were mostly suffering losses again to start the new week.

Shane Strowmatt, LGT
Reading time
5 minutes
Manufacturing PMI

The Purchasing Managers' Index for US industry and services (PMI Composite) fell slightly to 50.1 points in September from 50.2 points in August. A reading of 50 separates expansion from contracting, meaning US business activity is essentially flat. The PMI survey’s new orders index slipped to 47.7 points in September from 49.2 the previous month, which signals a slowdown for the US economy may be just ahead. Nevertheless, the US has largely escaped the worst scenarios many economists had predicted this year with consumer spending remaining generally strong and the labour market proving to be quite robust.

In Europe, composite PMI data for the euro area was less rosy, coming in at 47.1 points. That is higher than last month’s 46.7 points, but still in contractionary territory. The shrinking business activity suggests the eurozone may have contracted during the third quarter. The European Union expects just 0.8% economic expansion in the euro area this year, largely due to poor performance by the bloc’s largest economy, Germany. Composite PMI in Germany ticked up in September to 46.2 points, up from the 44.6 points in August, but like the euro area as a whole remains deep into contractionary territory.

In New York, stock indices stabilized on Friday after significant losses the previous day. The Dow Jones Industrial lost 0.3%, falling a total of 1.9% during the full week. The S&P 500 lost 0.2% in Friday’s session. The Nasdaq-100 squeezed out a marginal gain during the week’s last trading day. In individual stocks, Intel shares fell 1.4% after the US chipmaker was fined 376 million euros in an antitrust case in the EU on Friday. Shares in Activision Blizzard ended Friday’s session up 1.7% after the UK’s competition watchdog said Microsoft has addressed many of its concerns regarding a takeover of the video gaming company.

In the Asia-Pacific region, stock markets were mostly trading lower with Japanese stocks being the exception. Investors are looking forward to a whole range of inflation data this week from Singapore to Australia to the Tokyo region, which is considered a leading indicator for inflation in the world’s third-largest economy. In Tokyo, the Nikkei 225 gained 0.9% on Monday while the region’s other major stock indices lost ground. Hong Kong's Hang Seng Index was trading 1.3% lower, while the Shanghai Composite lost 0.5%. In South Korea, the Kospi fell 0.5%. In Australia, the S&P/ASX 200 was also 0.5% lower.

Corporate news in focus: There is no major corporate news scheduled today.

Economic data in focus: Germany’s ifo Business Climate Index (10:00 CET).


LGT helps you make informed investment decisions

All about global economic and market trends at a glance

You can also follow us on Facebook or LinkedIn – or visit Insights and discover interesting background articles. If you have questions, a consultant from the bank will be happy to help you.

Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.

Contact us