New Overnight Developments Abroad: Weak French, British and German Industrial Output Data
January 9, 2009
As markets brace for news of a big drop in U.S. jobs due at 13:30, news came of monthly drops of 2.4%, 2.3%, and 3.1% in November industrial production.
The dollar slid 0.3% against the yen, 0.2% against sterling, and 0.1% against the Swiss franc. Commodity currencies are softer: Ozzie dollar off 0.7%, kiwi down 0.5%, and C-dollar down 0.3% ahead of Canadian labor market figures. EUR/USD is unchanged.
The Nikkei slipped 0.5%. Stocks mixed to lower in Asia: South Korea -2.1%, Thailand -1.3%, India -1.9%, Singapore -1.2%, but China +1.6%, Indonesia +1.0%, Malaysia +0.9% and the Philippines +0.7%. Australian stocks up 1.1%. Dax up 0.1%, and Ftse off 0.4% in Europe.
Sovereign bond yields are lower. 10-year JGB off 1 basis point at 1.30%. Oil near $40 at $41.31/barrel, off 0.9%. Gold dipped 0.2%.
Although matching street estimates, investors reacted with disappointment to the 50-basis point magnitude of the Bank of Korea’s rate cut to 2.5%. South Korean producer prices fell 1.7% in December, cutting the 12-month increase to a 10-month low of 5.6%.
Japanese reserves jumped $27.8 billion in December and by $57.3 billion from end-2007
German industrial production sank 3.1% in November and 10.0% from a year earlier, the biggest 12-month drop since 1993. Output in October/November combined was 4.5% lower than in 3Q08 and down 5.0% from a year before.
A 2.4% on-month decline in French industrial output was paced by an 8.1% plunge (-26% y/y) in autos and took the level of output to a 111-month low.
British industrial production and factory output respectively fell in November by 2.3% and 2.9%. Respective on-year drops of 6.9% and 7.4% were the lowest since 1981. Factory output fell 3.3% in September-November, the greatest 3-month decline since March 1981.
Swedish industrial output and industrial orders posted monthly drops in November of 2.2% and 4.3% and annual declines of 11.9% and 26.2%.
British output-producer prices were flat in December and up 4.7%, surprising investors on the upside. Core PPI-O rose 0.2% and 5.0% from December 2007. Producer input prices fell 2.0% but rose 4.3%, also exceeding expectations.
German real retail sales (excluding automotives) rose by a greater-than-forecast 0.7% in November but fell 3.0% from November 2007. Such also dropped 0.5% in January-November from a year ago. Insolvencies in Germany were 5.3% lower in October than a year ago. Residential house prices rose 2.7% y/y in November.
Chinese car sales rose 7.4% in 2008. South African motor vehicle sales dived 25.9% between December 2007 and December 2008.
Norwegian consumer prices eased 0.2% in December and rose just 2.1% from a year before, but core CPI of 2.6% y/y exceeded expectations. The PPI plunged 5.1%, cutting the 12-month gain to 6.0% from 11.9% in the year to November.
The French trade deficit narrowed 11.2% between October and November but was 46.8% greater in January-November than a year earlier.
Euroland real retail sales rose 0.6% in November and fell just 1.5% from November 2007. Such results were not a bad as feared. French sales, up 1.8%, provided the main boost. Sales in October/November were still 0.6% less than the 3Q level.
Ninety minutes before the highly anticipated U.S. December labor report, Canada has just announced a somewhat greater-than-expected 34.4K decline in its jobs that month and a rise in the unemployment rate to 6.6% from 6.3% in November.
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