New Developments Abroad: Euroland Growth Fell 0.2% in 2Q As Expected

August 14, 2008

The dollar is mixed, with gains of 0.2% against the yen, Swissy and kiwi and of 0.1% against the euro, but drops of 0.3% against the Australian dollar and 0.1% relative to sterling.  The Canadian dollar is unchanged.

Stocks in India (-2.4%) and Japan (-0.5%) are lower, whereas the British Ftse (1.4%), Paris Cac (1.1%) and German Dax (0.7%) show gains.

Sovereign bond yields are mostly down.  The 10-year JGB is off 1.5 basis points after hitting a 4-month low of 1.425%.

Gold and oil firmed 1.0% and 0.3% to $839.50 per ounce and $116.40 per barrel.

Euroland posted its first quarter of negative growth since data began in 1995.  Real GDP fell 0.2% in 2Q from 1Q and rose 1.5% y/y, down from 2.1% in 1Q.

Among Euroland’s major three economies, GDP fell by a less-than-feared 0.5% in Germany but a greater-than-forecast 0.3% in France and Italy. In the fourth largest member economy, Spain, GDP unexpectedly firmed 0.1% but dropped to a y/y advance of 1.8% from 2.7% in the first quarter.  The smaller economies did better than the bigger ones; GDP rose 0.6% in Greece, 0.4% in Austria and Portugal, and 0.3% in Belgium.  Growth was hurt by high oil prices.

Ezone harmonized CPI inflation in July was revised down to 4.0% from a flash estimate of 4.1%.  Prices fell 0.2% m/m.

Japan’s Tertiary Index, a gauge of service sector activity, fell 0.8% in June, more than twice as much as forecast. Such fell 0.9% from June 2007.

Japanese stock and bond transactions generated a Y1517 billion inflow in the week to August 9 after a Y 462 bln inflow in the prior week.

South Korean import prices rose 1.1% in July and by 50.6% in the year to July, most since February 1998.

Chinese industrial production growth slowed to 14.7% y/y in July from 16.3% in 1H08 and 18.5% in full-2007.  Slower export growth was blamed.

Indonesian real GDP climbed by a faster-than-expected 6.4% y/y in 2Q after 6.3% in 1Q.

Swiss consumer confidence fell sharply in 3Q08.  Portuguese unemployment edged down to 7.3% in 2Q from 7.6% in 1Q.

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