New Developments Abroad: Weakest U.K. Consumer Confidence Since at Least 1974

July 31, 2008

The euro recovered 0.2%, rising back above $1.5600. The dollar is otherwise narrowly mixed — up 0.1% against the yen and sterling but off 0.1% against the C-dollar and A-dollar.  The Swissy is unchanged.

Oil slid 0.7% to $125.85/barrel after Wednesday’s sharp advance.  Gold firmed 0.8% to $919.90/ounce.

Equities sank another 2.7% in China but rose 1.2% in Korea, 1.1% in Indonesia, 0.5% in India 0.8% in Australia, and 0.1% in Japan.  The German Dax firmed 0.2%, while the British Ftse edged up 0.1% despite very weak data.

European sovereign bond yields are higher.  After hitting 1.515%, lowest since April, the 10-year JGB yield rose to 1.54%, 1.5 bps higher on balance.

The Nationwide house price index in Britain fell 1.7% m/m and 8.1% y/y, each the greatest declines since at least 1991.  Consumer confidence fell 5 points to minus 39, the weakest reading in this data series going back to 1974.  U.K. pay settlements in the 3 months to July rose 3.5%.

Romania’s central bank rate was raised to 10.25%.

Japanese housing starts fell 16.7% y/y in June, its biggest on-year drop of 1H08.  Construction orders dropped 11.7% after a 25.2% on-year tumble in May.

Japan’s PMI-manufacturing index recovered from 46.5 in June to 47.0 in July, signaling a continuing contraction in that sector. Stock and bond transactions generated a Y 457 billion outflow last week.  Wages fell 0.6% y/y in June, their first on-year drop of 2008. Real wages plunged 2.9% y/y, worst since Dec 2002.

Australia’s trade surplus as expected swung into surplus in June, and such was larger than expected at A$ 411 million.  Exports soared 29.2% y/y.

Australian retail sales fell 1.0% in June, against an expected 0.2% increase, but still showed year-over-year growth of 3.2%.  Real retail sales in 2Q fell 0.6%.

South African producer price inflation crept higher to 16.8% in June from 16.4% in May and posted a jump of 2.6% in June from May.

The flash CPI inflation indication for Euroland in July was 4.1%, most since at least 1997 and up from June’s 4.0%.  The euro area’s jobless rate in May got revised to 7.3% from 7.2% and remained at 7.3% in June, down only a tenth from the rate in June 2007.

German unemployment fell by another 20K in July and remained at 7.8% of the labor force.  The weakening economy has not spilled yet into the labor market, but it will.  Consumer spending remains very weak despite the improved labor market.  Real wholesale sales in Germany fell 1.5% m/m in June and rose 2.6% y/y.

South Korea authorities intervened in support of the won again today.  Industrial output in Korea firmed 0.2% m/m and 6.7% y/y.

Economic sentiment in Sweden fell sharply in July to 89.0 from 93.3 in June.  Consumer confidence dropped to a reading of -18.2 from -10.2.

Iceland’s trade balance swung into the black for the first time in five years.

Italian consumer prices rose 0.5% m/m and 4.1% y/y in July, matching the euro area’s mean rate.


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