European GDP, U.S. Retail Sales and Industrial Production, Continuing Coronavirus Spread, and Another Trump Dispute With Own Government People
February 14, 2020
From a news standpoint, Friday has been a very busy day, but financial market movements have been tempered.
- Mid-morning in NY finds the dollar up 0.2% against the Swiss franc and sterling and plus-or-minus 0.1% relative to other key currencies.
- Share prices fell 0.6% in Japan and 0.5% in India and New Zealand but up 0.5% in South Korea and 0.4% in Australia and China. Equities have fallen 0.4% in the U.K., Spain, and France but unchanged in Germany and the United States.
- 10-year sovereign debt yields have dropped 4 basis points in the U.K. and U.S. and by 2 bps in Germany.
- WTI oil advanced 1.2%. Opec aims to curb supply to support prices. Gold has firmed 0.3%.
Worldwide reported deaths from the coronavirus stand at 1,383, and cases exceed 64.5k.
President Trump is in an escalating dispute with his own Justice Department over the reduced sentence for Roger Stone. Attorney General Barr, heretofore among the president’s staunchest defenders and enablers, has accused Trump of bullying his department.
In January, U.S. retail sales rose 0.3%, but industrial production fell 0.3%. Sales recorded a 4.4% on-year advance, while production was 0.8% lower than a year earlier. Production has recorded declines in four the the past five reported months. Capacity usage slipped 0.3 percentage points to 76.8%, lowest since the summer of 2017.
U.S. import prices recorded no monthly change in January, as a 0.2% uptick in non-fuel costs counterbalanced a 2.2% plunge in fuel. Import and export prices were respectively 0.3% and 0.5% higher than i n January 2019. The Reuters/U. Michigan index of consumer sentiment rose a full point this month to a 23-month high of 100.8.
Euro area real GDP growth last quarter has been revised to a 0.1% quarterly uptick, lowest since the winter of 2013, and 0.9% on year, the lowest 4-quarter rise since the final quarter of 2013. Among the five largest economies using the euro, quarterly growth was flat in Germany, down 0.3% in Italy and 0.1% in France, but up 0.5% in Spain and 0.4% in The Netherlands. Euroland real GDP expanded on average by 1.2% in 2019. In Germany, personal consumption and government spending recorded slower growth in 4Q than 3Q. Net foreign demand exerted a drag on growth, and business investment in machinery and equipment contracted in the latest quarter. But construction performed better.
In Eastern Europe, GDP in the Czech Republic went up only 0.2% on quarter, lowest in 23 quarters and trimming on-year growth to 1.7%. Polish GDP also rose just 0.2% on quarter, reducing its year-on-year growth to 3.1% from 4.9% in the final quarter of 2018. Hungarian GDP grew 1.0% on quarter, 4.5% between 4Q18 and 4Q19, and 4.9% on average in 2019. Romanian GDP accelerated to quarter-on-quarter and year-on-year growth of 1.5% and 4.2% in the final quarter of 2019.
Euroland’s seasonally adjusted trade surplus rose in December to a 2-month high of EUR 22.2 billion on monthly export growth of 0.9% and a 0.7% drop in imports. The full-2019 trade surplus of EUR 225.7 billion was EUR 31 billion or 16% bigger than the previous year’s surplus in spite of a modest decline in Germany’s surplus.
Euroland employment increased 0.3% last quarter, most since the first quarter of 2019, and was 1.0% greater than a year earlier.
The Swiss PPI/import price index was unchanged in January, but the 1.0% on-year drop was the smallest decline in eight months. Domestic producer prices fell 0.6% on year, while import prices were 1.9% lower.
Spanish CPI inflation accelerated 0.3 percentage points to a 9-month high of 1.1% last month.
Greek CPI inflation of 0.9% in January was also at a 9-month high. Greek import prices shot up 3.2% in December, widening their on-year advance to 11.4%.
German wholesale prices went up 1.0% in January, resulting in their first year-on-year increase (0.3%) since last June when a similar 0.3% occurred.
Food prices in New Zealand leaped 2.1% in January, lifting their on-year increase by 1.1 percentage points to a 100-month high of 3.5%.
Wholesale price inflation in India last month of 3.1% was the highest in nine months, reflecting accelerating costs of both fuel and manufactured goods.
China’s current account surplus narrowed to a 3-quarter low of $40.1 billion last quarter, but the full-2019 surplus of $177.5 billion was 3.6 times greater than the prior year’s surplus.
Japan’s monthly tertiary index of service sector activity slipped 0.2% in December and was 0.8% below its year-earlier level. That was the third on-year drop in a row. The tertiary index in 2019 went up 0.6%, less than the increases of 1.1% in 2018 or 0.8% in 2017. A 2.8% plunge of the tertiary index in the year’s final quarter reflected the sales tax hike implemented last October 1.
Turkey’s current account deficit last December of $2.80 billion was the largest gap since mid-2018, but a surplus of $1.67 billion in 2019 was the first calendar year surplus in 18 years.
New Zealand’s manufacturing purchasing managers index rose 0.4 points to a 2-month high in January but was the third sub-50 result in five months.
Brazil’s economic activity index dropped to a 10-month low in December.
The Central Reserve Bank of Peru‘s key interest rate was left steady at 2.25%. Seven 25-basis point cuts were engineered between July 2017 and November 2019. A statement from the bank’s Board of Directors projects continuing inflation around 2.0%, observes disappointing performances last year in the primary goods sector and public spending, and calls the coronavirus impact still highly uncertain.
Copyright 2020, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Central Reserve Bank of Peru, China's current account, Euroland GDP, Swiss producer prices., U.S. retail sales and industrial production
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