New Overnight Developments Abroad: Waiting for July U.S. Labor Force Survey

August 7, 2009

The whisper numbers on non-farm payroll employment suggest a smaller-than-forecast drop in U.S. jobs.  Release Canadian figures suggest otherwise.

The dollar is narrowly mixed.  Largest change is a 0.5% rise against the Aussie dollar.  Greenback is also up 0.3% against sterling and 0.2% versus the Canadian dollar.  It is unchanged against the euro and Swiss franc and down 0.2% against the yen and kiwi.

Stocks in China suffered a sharp further retreat of 3.0%.  A major Chinese bank announced plans for a 70% cut in lending in the second half of 2009.  Stocks also fell by 2.1% in the Philippines, 2.5% in Hong Kong, and 2.3% in India.  Japan’s Nikkei eked out a 0.2% uptick.  But in Europe, the Ftse, Dax and Paris Cac are off by 1.8%, 0.9% and 1.1%.

Ten-year Gilt yields are off 6 basis points after yesterday’s somewhat unexpected news that the Bank of England is expanding its asset purchase program.

Oil is down 0.9% at $71.32 per barrel.  Gold is 0.2% lower at $960.80/ounce despite the decision by central banks in Europe to limit gold sales.

Late Thursday, the central bank in Peru announced a greater-than-anticipated 75-basis point cut in its benchmark lending rate to a 5-year low of 1.25%.  The rate has fallen 525 bps this year.  Lower-than-expected inflation of 2.7% in July gave officials the opportunity to promote domestic demand a little more forcefully.

Canada reported labor statistics ninety minutes ahead of the United States, and these showed an unchanged 8.6% jobless rate but a 44.5K decline of jobs, which was twice as big as had been forecast.  The Canadian IVEY-PMI index will be reported later today.

German data released today showed

  • An unexpected 0.1% dip in June industrial production (minus 18.1% on year) after May’s sharp 4.3% advance.  Factory output was unchanged.  Industrial production fell 0.9% in the second quarter after tumbling 6.6% in 4Q08 and by 11.9% in 1Q09.
  • A larger-than-forecast current account surplus of EUR 13.3 billion in June following a EUR 4.2 billion surplus in May.  The first-half surplus of EUR 43 billion was 53.5% lower than in 1H08.
  • Monthly leaps of 7.0%  and 6.8% in merchandise exports and imports.  Both had fallen marginally over 25% between September and May.
  • On-year increases of 15% and 0.4% in business insolvencies and individual bankruptcies.

The Reserve Bank of Australia released a quarterly  Monetary Policy Statement that says the next change of the 3.0% cash rate is likely to be up but that implies there is not a need to do that soon.  In-target CPI inflation is projected in both 2010 and 2011.  Under a new forecast, real GDP would improve from 0.5% this year to 2.25% in 2010 and 3.75% in 2011.  Australia is one of the few countries that averted a recession.  Separately, the government announced plans to issue inflation-indexed bonds for the first time in six years.  Australia’s construction index fell 3.1 points to 39.5 in July despite a 7.9-point increase in the home building component to 51.9.

Russia’s central bank rates were reduced by 25 basis points.  The refinancing and repo rates are now at 10.75% and 9.75%.

The contraction of Italian real GDP slowed to a quarterly pace of 0.5% in 2Q from 2.7% in the first quarter, but the on-year change remained at minus 6.0%.  This was the fifth straight quarter of negative growth.  Italian industrial production dropped 1.2% in June.

British producer output prices rose 0.3% in July but fell 1.3% from a year earlier.  These results are a touch above expectations.  Core PPI-O rose 0.5% m/m and 0.2% y/y.  Producer input prices sank 1.4% from May and by 12.2% from June 2008.

The French trade gap in June of EUR 4.01 billion was 27.7% wider than May’s deficit.  Exports slid 1.7%.  The first-half deficit of EUR 2.537 billion was 5.2% smaller than in 1H08.

The Swiss jobless rate ticked up to a 58-month high of 3.9% in July as expected.

Romanian industrial production rose 2.3% in June, trimming the year-over-year drop almost in half to 5.9%.  Slovakian industrial production fell 19.6% in the year to June.

Norwegian industrial output rose 0.8% in June but fell 6.3% from June 2008.

Spanish export prices and imports prices fell in the year to June by 4.3% and 10.7%.

Chinese car sales were 70.5% greater in June than a year earlier.

Aside from the highly anticipated U.S. labor force survey, the release of U.S. consumer credit is also scheduled for today.

Copyright Larry Greenberg 2009.  All rights reserved.  No secondary distribution without express permission.

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