New Overnight Developments Abroad: Australian 2Q GDP Growth Faster Than Expected

September 2, 2009

Stocks in Asia and Europe continued to fall.  Japan’s Nikkei fell 2.4%, and markets closed down 1.8% in Hong Kong and Indonesia, 1.0% in Singapore, 1.6% in the Philippines, 0.6% in South Korea, 1.7% in Australia, and 0.5% in India.  In Europe, French, German, and British equities are trading 0.9%, 0.8%, and 0.5% lower.

The dollar has eased 0.5% against the Australian dollar, 0.3% relative to the4 yen, and 0.1% against sterling, the Canadian dollar and the euro.  Swissy is steady.

The yield on 10-year JGBs firmed 2 basis points to 1.32%.  Bund and gilt yields are softer.

Oil rose 0.7% to $68.52 per barrel.  Gold edged off 0.1% to $956 per ounce.

Australian GDP climbed 0.6% last quarter, twice as much as forecast and above the prior quarter’s 0.4% advance.  Private and public consumption increased 0.8%, and business investment rose 1.9%.  The strength of domestic demand outweighed a 0.3 percentage point negative growth contribution from net exports and imports gained 2.1% while exports climbed 1.0%.  Real GDP was also 0.6% greater than in the second quarter of 2009.

Revised Euroland GDP in 2Q confirmed growth of minus 0.1% from 1Q and minus 4.7% from the second quarter of 2008.  Private consumption and government spending firmed 0.1% apiece.  Exports fell much more slowly (1.1%) than their declines of 8.8% in 1Q and 7.2% in 4Q08.  Inventories exerted a 0.7 percentage point drag on the 2Q growth rate.  GDP gains of 0.3% in Germany, France, and Greece were offset by declines of 1.1% in Spain, 0.9% in the Netherlands, 0.5% in Italy and 0.4% in Belgium.  Juncker said it is too soon to withdraw fiscal stimulus in the region.

Japan’s monetary base increased 6.1% in the year to August, same and the on-year increase in July but down from a 2.5% rise in the year to 2Q.

Producer prices in the euro area slumped 0.8% in July and by a record 8.5% from a year earlier.  Energy prices fell 3.1%, while all other producer prices were steady compared to June.  The PPI was 0.5% lower than its 2Q average level.  The euro hit a 7-week low against the yen.

Britain’s construction PMI improved to 47.7 in August from 47.0 in July.

A spokesman from the Democratic Party of Japan reiterated that excessive yen movements (meaning appreciation) will be resisted with a policy response (meaning intervention).

Norway’s manufacturing PMI worsened to 42.3 in August from 50.1 in July.

Motor vehicle sales in South Africa sank 26.2% in th year to August, slightly less than the 27.4% drop in the year to July.

Slovakian GDP increased 2.2% last quarter but was 5.3% less than in 2Q08.

Scheduled U.S. data include factory orders, productivity and unit labor costs, the ADP estimate of private employment, and oil inventories.  The FOMC also releases minutes from its August meeting, while the central bank in Brazil’s policy-making committee, COPOM, is not expected to change its key Selic rate after today’s meeting.

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


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