New Overnight Developments Abroad: German Industrial Orders Jumped 4.4% in May
July 7, 2009
Sterling weakness persists. Pound off 0.6% against euro and dollar. Dollar movements small otherwise: up 0.2% against the kiwi and Swissy, up 0.1% versus the yen, down 0.1% versus the Aussie dollar and Canadian dollar, and unchanged against the euro.
Asian stocks closed mostly lower, with drops of 1.0% in China, 1.5% in Vietnam, 0.7% in Hong Kong, 0.4% in Australian, and 0.3% in Japan and Sri Lanka. European bourses trading higher, however, with gains 0f 0.8% in France and Germany and 1.0% in Britain.
Ten-year gilt, bund and Treasury yields are firmer, while the 10-year JGB is flat at 1.32%.
Oil advanced 0.5% to $64.39/barrel, and gold firmed 0.1% to $925.60 per ounce.
German industrial orders shot up 4.4% in May, most in 23 months but were still 28.8% lower than in May 2008. A 3.8% gain in April/May from 1Q follows drops of 17.0% in 4Q08 and 14.4% in the first quarter of 2009. Analysts had expected orders to recover just 0.5%. Both domestic demand (+3.9%) and export orders (+5.2%) rose sharply. Domestic orders for capital goods, a gauge of future business investment spending, increased 6.5%. Germany’s finance minister nevertheless cautioned that global economic turmoil will persist for quite a few more months, and Ordonez of the European Central Bank warned that officials must be alert to the risks of deflation.
Unrest in Xinjiang, China, where over 150 have died, appears to be spreading.
The Reserve Bank of Australia left its policy cash rate unchanged at 3.0% after its monthly meeting as analysts had expected, but officials left the door open for more monetary easing if that proves necessary. Inflation is expected to fall further in coming months, due to slacker plant capacity usage and labor markets. A released statement was more upbeat about Australian and global growth prospects, claiming that Australian growth had not developed as weakly as officials had anticipated a few months ago.
Australia’s construction index fell 4.3 points in June to 42.6. New Zealand, where the central bank is not expected to change rates at its July 30th policy meeting, reported improved but still negative business sentiment. Such was minus 25% in the second quarter after -65% in 1Q09.
British industrial production was considerably weaker than expected in May, dropping 0.6% on month and by 11.9% from May 2008. Industrial production in the three months to May fell 1.8% below the level of the three months to February and 12.3% from a year earlier. Factory output dropped 0.5% in May and 12.7% from May 2008.
The British Chamber of Commerce released results from its 2Q economic survey. Manufacturers showed a greater improvement than service sectors but trailed the latter in absolute terms. Domestic sales printed at -37 after -55 in the first quarter in manufacturing and at -16 after -23 in services.
Norwegian industrial output sank 3.1% in May and by 7.8% from a year earlier. Both declines were larger than those in April.
France reported a EUR 2.718 billion trade deficit for May, 29.2% narrower than in April.
Russian consumer price increases in 1H09 accrued to 7.4%, down from 8.7% in the first half of 2008, but June’s 0.6% monthly increase exceeded expectations.
Consumer prices in June also rose 0.6% in the Philippines, halving the 12-month pace from 3.3% in May to 1.5%, smallest since April 1987. Taiwan’s trade surplus of $1.76 billion in June was smaller than forecast. Compared to June 2008, imports dropped 33.5%, more than the 30.4% decline of exports.
The Czech trade surplus of CZK 11.71 billion in May was 2% smaller than in April but 20.3% larger than posted in May 2008. Hungarian industrial production firmed 2.6% in May but was 22.1% less than a year earlier. April had seen an on-year output drop of 25.3%.
Canada, which yesterday projected budget deficits through fiscal 2014, releases its IVEY-PMI figures and building permits later today. There are no significant monthly U.S. data due today. G-8 leaders are beginning to assemble in Italy, where the annual summit begins tomorrow.
Copyright Larry Greenberg 2009. All rights reserved. No secondary distribution without express permission.
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