US ISM Manufacturing, EZ PPI And AUS Q2 GDP

According to my TradingFloor.com colleague John J. Hardy's article on the historical forex significance of Labor Day, we should begin to see markets pick up in the coming days, as the summer vacation effect starts to wear off and investors return to their trading desks.

To celebrate the new season, we have a few juicy economic data releases for you. Manufacturing data in the US should provide us with an early indicatation of the strength of the economic recovery, while eurozone PPI data and GDP figures for Australia are also due out.

US ISM Manufacturing (14:00 GMT) Tuesday’s manufacturing PMI data will be the first real opportunity since Jackson Hole to test the strength of the US recovery. The manufacturing index came in at 49.8 in July and is delicately poised for a return to a neutral position of 50 in August after two months in contraction. This contrasts with PMI data from the eurozone and China released yesterday which came in lower than expected.

The Markit Manufacturing PMI for the eurozone was revised to 45.1 for August from an initial estimate of 45.3, while the HSBC Manufacturing PMI for China came in at 47.6 from 49.3 in the previous month, pointing to a serious contraction ahead. An upturn in manufacturing activity, combined with strong payroll data next Thursday, would almost certainly keep the doves on the FOMC at bay until the New Year.

Eurozone PPI (09:00 GMT) Producer price inflation for the 17-country euro bloc is expected to have picked up in July. PPI for the eurozone is forecast to rise by 0.2%, according to analysts’ estimates, after a contraction of 0.5% in June. However, the indicator is likely to come in lower on an annualised basis, falling to 1.6% in July, compared to 1.8% the previous month.

The recent slowdown can largely been attributed to the decline in energy prices, with Eurostat reporting a 1.7 percent fall in prices for June. If energy prices are excluded, PPI came in at 0.9% for the month, marking a consecutive 12-month downward trend in prices.

Australia GDP Q2 (01:30 GMT Wednesday) GDP for Q2 is forecast to have expanded by 0.8% in the second quarter of 2012, down from 1.3% in the previous quarter. Despite the slight improvement in manufacturing data reported on Sunday, weak global demand continues to act as a drag on the country’s mining sector. Latest estimates from the RBA commodity price index showed Australia's commodity prices fell to a 20-month low in August, although it still remains well above the 2003 levels.

Australia’s biggest concern is the recent slowdown in China, one of its largest trading partners, where GDP grew by just 1.8 percent in the second quarter. Monday’s PMI data from China will be an added concern for policymakers in Sydney. But the RBA is unlikely to fret too much in the knowledge that China - unlike its counterparts in the West - has the tools and political support to stimulate its economy if needed.