New Developments Abroad: European Data Worse Than Forecast

August 1, 2008

Ahead of monthly U.S. labor market figures, the dollar rose overnight by 0.8% against the Australian dollar and 0.7% relative to the kiwi.  It is 0.3% higher against sterling and up by 0.2% against the euro and C-dollar.  It firmed 0.1% against the Swissy but fell 0.3% against the yen.

The Japanese Nikkei slumped 282 points or 2.1% to start a new month.  The Dax and Ftse are down by 1.0% and 0.9%.

The yield on 10-year JGB’s hit a 3-month low of 1.505% and is off 1.5 basis points at 1.515%.

Oil prices eased 1.0% to $122.81/barrel.  Gold softened 0.6% to $917.60/ounce.

Euroland’s PMI-manufacturing index printed at 47.4, revised downward from a flash indication of 47.5.  That’s the lowest reading since June 2003 and compares with 49.2 in June and 54.9 a year earlier.

National PMI scores included 50.9 for Germany versus 52.6 in June, 45.3 for Italy, down from 46.9, 47.1 for France after June’s 49.2, and a record low of 39.2 in Spain versus 40.6 in June and 53.2 in July 2007.  The Dutch PMI fell to 48.0 from 51.1 in June and 58.2 in July 2007.

According to government data, German retail sales fell 1.4% in June, three times more than forecast, and by 3.9% y/y.  Bundesbank data for real retail sales including motor vehicles and gas stations slumped 2.8% m/m and 3.7% y/y in June.

Japanese motor vehicle sales rose 3.6% y/y in July but fell by 1.2% y/y in January-July.

A press report in Australia from usually informed sources said the Reserve Bank would consider a rate cut at next week’s meeting and most likely reduce rates in September in the first of a series of cuts.  Australia’s PMI slid to 46.9 in July from 47.0 in June.  The commodity price index rose 3% in July.

Several Asian economies reported higher CPI inflation: 9.2% in July in Thailand versus June’s 8.9%, 5.9% in South Korea after 5.5%, and 11.9% in Indonesia after 11.0%.

The British PMI fell more than expected to 44.3 in July from 45.9 in June and 55.8 in July 2007.  It was the weakest factory sector PMI since end1998.

Swedish GDP was unchanged in 2Q from 1Q  and up just 0.7% from 2Q07.  Gains of 0.3% q/q and 2.0% y/y had been forecast by the street.


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