A Stew of FOMC Minutes, Preliminary Purchasing Manager Survey Results, and Producer Price and Consumer Confidence Reports – Currency Thoughts

A Stew of FOMC Minutes, Preliminary Purchasing Manager Survey Results, and Producer Price and Consumer Confidence Reports

August 21, 2025

In spite of on-going concern about tariffs and geopolitical strains, the preliminary readings of August purchasing manager surveys highlighted unexpected economic resilience around the world:

• The S&P Global-compiled U.S. composite PMI index jumped to an 8-month high of 55.4 due to a 39-month high manufacturing score of 53.3 that outweighed a 2-month low service sector reading of 55.4. The improvement was associated with stronger inflationary pressure. These data suggest that U.S. GDP growth this quarter may be as much as twice the average pace in the first half of 2025.
• Euroland is coping as well, as attested by a 15-month high composite PMI of 51.1 that exceeded analyst expectations due mainly to a 38-month high manufacturing PMI that was 3.5 index points above the July finalized reading.
• Japanese composite and manufacturing PMI readings also surpassed expectations and rose to 6- and 2-month highs, respectively.
• India’s composite PMI score leaped 4.1 points to 65.2, representing the fastest rate of expansion in at least two decades.
• The British composite PMI jumped 2.5 points to a 12-month  high of 53.0. Manufacturing and service sector activity both outperformed analyst expectations.
• The German preliminary PMI composite score of 50.9 was at a 5-month high, and France’s 1-year high of 49.8 suggest that its economy is at long-last stabilizing.

The annual monetary policy symposium in Jackson Hole, Wyoming got underway today. Meanwhile, financial market participants continue to digest minutes from the last FOMC meeting that were released yesterday afternoon and that showed a majority of committee members attaching more concern to the risk of higher actual and expected inflation than to the possibility of weakening employment. A minority are equally worried about these two risks, and an even smaller contingent believe that the greater danger lies with deficient future growth. Atlanta Federal Reserve President Bostic made remarks that clearly place him in the majority camp. He thinks the most prudent course of monetary policy over the balance of 2025 would involve just one interest rate cut, not two.

Among other U.S. data releases this Thursday, new jobless insurance claims increased by 11k last week to an 8-week high of 235k. The Philly Fed manufacturing index fell back to a reading of -0.3 in August from +13,9 in July and -4.0 in June. Existing home sales rebounded 2% in July to to an annualized 4.01 million in July after dropping by 2.7% in June, and the Conference Board’s index of leading economic indicators dipped 0.1% last month, while the index of coincident economic indicators rose by 0.2%.

In overnight financial market action this Thursday, the dollar rose 0.5% against the yen, 0.4% versus the Swiss franc, 0.3% relative to the euro, and 0.2% against the Canadian dollar and sterling. Ten-year sovereign debt yields climbed five basis points  in the U.K., four bps in Italy and three basis pints in the United States, Germany, France and Spain. The price of oil firmed 0.4%, while Bitcoin’s cost dipped 0.7%. Share prices in the Pacific Rim rose 1.4% in Taiwan, 1.2% in Australia and 0.9% in New Zealand but closed down 0.7% in Japan. U.S. equity indices are marginally lower. European equity market changes so far today have also been muted.

Producer price inflation in Poland was its least negative in July at -1.2% in four months. Producer price deflation also continued in Latvia (-0.6%), Estonia (-2.2%), and Russia (-0.3%). Alternatively, PPI inflation in Canada rose to a 4-month high of 2.6% and slowed 0.2 percentage points to a 2-month low of 1.1% in Slovenia. South Korea’s PPI rate of +0.5% last  month matched June’s 2-month high.

Consumer sentiment during August weakened to a 4-month low in the euro area and a 3-month low in Denmark but improved to a 14-month high in Belgium and a 2-month high in Turkey.

The Confederation of British Industries’ industrial trends survey index fell back three points in August,  matching June’s 5-month low of -33. In 2025, only a reading of -34 was lower.

Retail sales in Mexico underperformed expectations in July, dropping 0.4% on month and slowing to a 2.5% year-on-year advance.

Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

Tags: FOMC Minutes, preliminary purchasing manager surveys

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