US ECONOMY & POLITICS

Growth at U.S. Services, Factories Slows to an Eight-Month Low – Bloomberg, 8/23/2021

• U.S. business activity continues to downshift, with growth slowing to an eight-month low in August against a backdrop of materials shortages, a lack of labor and an upswing in coronavirus infections.
• The IHS Markit flash August composite index of purchasing managers at services and manufacturers dropped to 55.4 from 59.9 a month earlier, the group reported Monday.
• At factories, for instance, an IHS gauge of supplier deliveries showed the longest lead times in records back to 2007.
• The group’s composite index of input prices increased in August to the second-highest reading in data back to 2009.
• A measure of prices received also advanced, indicating companies are having some success passing along higher costs.
• The IHS Markit index of services activity declined to show the slowest pace of growth since December, while a measure of new business dropped to a one-year low.
• The group’s gauge of U.S. manufacturing activity reached a four-month low as output, factory employment and orders cooled. Indexes of both input and output prices climbed to the highest in survey history.

U.S. Home Sales Rose 2% in July Amid Higher Inventory – Wall Street Journal, 8/23/2021

• Sales of previously owned homes rose in July for the second straight month as high prices prompted more homeowners to put their houses on the market.
• Existing-home sales rose 2% in July from the prior month to a seasonally adjusted annual rate of 5.99 million, the National Association of Realtors said Monday. July sales rose 1.5% from a year earlier.
• The median existing-home price rose 17.8% in July from a year earlier, NAR said, to $359,900, easing from a revised record high of $362,800 the prior month.
• Many homes are still selling above listing price and receiving multiple offers. The typical home sold in July was on the market for 17 days, the same as the prior month, NAR said.

Pelosi, Centrist Democrats in Standoff With Key Vote Ahead – Wall Street Journal, 8/23/2021

• Centrist House Democrats were locked in a weekend standoff with House Speaker Nancy Pelosi (D., Calif.) over when to vote on a roughly $1 trillion infrastructure bill, imperiling the chamber’s ability to advance a sweeping segment of President Biden’s agenda in votes expected early this week.
• A group of nine centrist Democrats has been at an impasse with Mrs. Pelosi and liberal Democrats for more than a week over a strategy to tie together the infrastructure bill, already passed with bipartisan support in the Senate, and Mr. Biden’s $3.5 trillion package of healthcare, education and climate provisions currently being crafted.
• But earlier this month, the group of centrist Democrats balked at the plan and demanded that Mrs. Pelosi first bring the infrastructure bill to the House floor to swiftly pass it.
• Unless that happens, they threatened to oppose a budget framework, which is the first step in advancing the broader $3.5 trillion budget package and is expected to get a vote on the House floor Tuesday.
• Dozens of liberal House Democrats have said they would not vote for the infrastructure bill until the broader budget package passes the Senate, in a bid to use their muscle to maintain pressure on centrist Democrats, some of whom have expressed concerns over the size and cost of a $3.5 trillion bill.
• Mrs. Pelosi can lose no more than three Democrats on votes expected to be opposed by all Republicans.

Studies show modest job gains from U.S. states’ benefit cuts – Reuters, 8/23/2021

• New U.S. state-level data and accompanying studies show a group of largely Republican governors did not yet get the job boom they hoped for by cutting federal unemployment benefits this summer, but the loss of the stipend did appear to prompt some of the unemployed to take jobs.
• Separate analyses released last week, using different data sets and methods, concluded that the 26 states that cut a $300 weekly federal unemployment stipend this summer did see the unemployed find a job at a faster rate, perhaps as much as 6 percentage points, than did the 24 states planning to continue the benefit at least until its scheduled national expiration in early September.
• However, the states that cut benefits saw worse results in pulling people back into the formal labor force, to the degree that overall job growth in the two groups of states was nearly identical from May through July.

Mexico wants talks with United States over auto content rules in trade pact – Reuters, 8/23/2021

• Mexico sought formal consultation with the United States on Friday over the interpretation and application of tougher content rules for automobiles set out in the USMCA trade pact.
• In May, Mexico voiced disagreement over the issue in a three-way online virtual meeting when it cited differences with the United States methods. Canada and Mexico use more flexible interpretations.
• In her letter on Friday to U.S. Trade Representative Katherine Tai, Clouthier said Mexico wanted to avoid or resolve a possible dispute.
• The United States-Mexico-Canada Agreement (USMCA), the successor to the North American Free Trade Agreement (NAFTA), requires 75% North American content for a vehicle to be considered as being from North America.
• The same percentage will apply for so-called essential parts from July 1, 2023, up from 69% now, and compared to 62.5% under the previous trade pact.

EUROPE & WORLD

UK growth slows to six-month low as post-lockdown shortages bite -PMI – Reuters, 8/23/2021

• Britain’s post-lockdown economic rebound slowed sharply in August as companies struggled with unprecedented shortages of staff and materials, though strong inflation pressures cooled a bit, a survey showed on Monday.
• The IHS Markit/CIPS flash composite PMI dropped for the third month in a row, sinking to 55.3 from 59.2 in July, its lowest since February and a sharper fall than a median forecast of 58.4 in a Reuters poll of economists.
• The equivalent PMI for the euro zone slowed much less, dropping to 59.5 from 60.2.
• The fall in the PMI was mostly driven by services firms who make up the bulk of Britain’s economy. Manufacturing dipped only slightly although automotive and electrical goods production fell into decline mainly due to supply constraints.
• The PMI’s gauge of input prices fell after hitting its highest in more than 20 years in July, and the prices charged by factories moved further away from June’s record high.

German private sector stays on growth path in August -PMI – Reuters, 8/23/2021

• Activity in Germany’s manufacturing and services sectors expanded in August, a survey showed on Monday, pointing to recovering employment levels, strong demand and a rosier business outlook even though the pace of growth fell slightly.
• IHS Markit’s flash Purchasing Managers’ Index (PMI) showed activity in the manufacturing sector to fell a seven-month low of 62.7 from 65.9 in July.
• Activity in the services sector slowed to a two-month low of 61.5, down from 61.8 in July.
• As a result, the flash composite PMI, which tracks the manufacturing and services sectors that together account for more than two-thirds of the German economy, fell to 60.6 from 62.4 in July.

Growth in French business activity eased in August -PMI – Reuters, 8/23/2021

• Growth in French business activity eased in August compared to July, according to initial forecasts in a monthly survey, as problems with supplies of goods and COVID-19 health protocols impacted trade.
• Data compiler IHS Markit said its preliminary Purchasing Managers’ Index (PMI) for France’s dominant services sector fell to 56.4 points in August from 56.8 in July — below a forecast for an August reading of 57.0 points.
• The August preliminary manufacturing PMI also fell to 57.3 points from 58.0 in July, below a forecast for 57.8 points.
• The overall August preliminary composite PMI fell to 55.9 points from 56.6 in July, although overall the PMI figures remained above the 50-point threshold dividing an expansion in activity from a contraction.

Japan’s private-sector activity hit by COVID-19 surge – PMI – Reuters, 8/23/2021

• Japan’s factory activity growth slowed in August, while that of the services sector shrank at the fastest pace since May last year, highlighting the increasingly heavy toll a recent wave of COVID-19 infections is taking on the economy.
• The au Jibun Bank Flash Japan Manufacturing Purchasing Managers’ Index (PMI) fell to a seasonally adjusted 52.4 in August from a final 53.0 in the prior month.
• Overall orders and export orders increased, though the pace of growth was the slowest in seven months.
• Firms faced severe supply chain disruptions from a global semiconductor shortage, IHS Markit said.
• The au Jibun Bank Flash Services PMI index dropped to a seasonally adjusted 43.5 from the previous month’s final of 47.4, hitting its lowest since May 2020, when Japan’s economy went through a deep COVID-19 slump.
• The au Jibun Bank Flash Japan Composite PMI, which is estimated by using both manufacturing and services, fell to 45.9 from July’s final of 48.8, hitting its lowest since August last year.

China halts over 40 IPOs amid regulatory probe into law firm, broker – Reuters, 8/23/2021

• Chinese bourses have halted more than 40 initial public offerings (IPOs) in Shanghai and Shenzhen amid a regulatory probe into several intermediaries in the deals, according to official exchange disclosures.
• The Shenzhen Stock Exchange suspended more than 30 IPOs, including public share sale plans by BYD’s chip unit, on Aug. 18, according to exchange filings. The Shanghai Stock Exchange has pressed the pause button on eight IPOs targeting the city’s tech-focused STAR Market since Aug. 19.
• The companies attribute the IPOs’ halt to an investigation by the China Securities Regulatory Commission (CSRC) into intermediaries including Beijing-based Tian Yuan Law Firm, China Dragon Securities Co and CAREA Assets Appraisal Co.
• On Monday, China said it would tighten scrutiny over accounting firms in a fight against financial forgery, vowing “zero tolerance” toward misconduct.

Factmonster – TODAY in HISTORY

• Scottish leader and national hero, William Wallace, was executed in London. (1305)
• Japan declared war on Germany in World War I. (1914)
• Nicola Sacco and Bartolomeo Vanzetti were executed for the murders of two men during a 1920 robbery, despite worldwide protests. (1927)
• Nazi Germany and the Soviet Union signed a non-aggression treaty. (1939)