Many Data Releases Set for Tuesday

December 8, 2008

Revised Japanese GDP and the Bank of Canada’s final scheduled interest rate policy announcement head a very crowded data and events schedule tomorrow. The Canadian meeting, which I expect to implement a rate cut of at least 50 basis points, will be previewed in a separate post.

Japanese national income accounts, that is GDP and its many parts, are plagued by serious measurement shortcomings and are famous for yielding big and oftentimes unforeseen revisions. Third-quarter real GDP was initially estimated last month to have dropped 0.4% at a seasonally adjusted annual rate. The revision is expected to be downward, because subsequent data on investment spending were weaker than assumed initially. Also, momentum in Japan’s economy headed south late in the quarter, and survey evidence suggests that the current recession will be more severe than any of the series of recessions experienced since 1990. Industrial production slumped 7.2% at a seasonally adjusted annual rate last quarter, and corporate surveys of planned activity point to a devastating fourth-quarter plunge of more than 30% saar. The table below compares preliminary readings of GDP growth expressed at a seasonally adjusted annual rate with first revisions released a month after the preliminary calculations and with estimates made last month embodying further revisions. The magnitude of first revisions between the first and second estimates, without regard to direction, averaged 0.7 percentage points (ppts) for the four quarters to 2Q08 and 1.2 ppts for all subsequent changes.

  2Q08 1Q08 4Q07 3Q07
Prelim -2.4% +3.3% +3.7% +2.6%
1st Revision -3.0% +4.0% +3.5% +1.5%
As of 11/08 -3.7% +2.5% +1.8% +2.3%


Germany, France and and Britain each release monthly trade figures tomorrow just as Japan did today. The shocking aspect in Japan’s report was a decline of 9.4% in October exports from a month earlier. Exports also dropped on a seasonally adjusted basis in September. Exports and the trade surplus posted on-year decreases of 7.3% and 87.2%. Germany, which has already announced monthly plunges in October of 6.1% in industrial orders and 2.1% in industrial production, has seen export demand contract sharply. In euro area’s largest economy, the ZEW Institute will release monthly estimates for investor sentiment toward both Germany and Euroland, which tend to move in lock-step with one another.

Several British indicators arrive Tuesday aside from the trade report. Two involve the housing market and specifically prices, one from the Department of Communities and Local Government  (DCLG which showed the biggest on-year drop in 30 years in September) and another compiled by the Royal Institute of Chartered Surveyors (RICs). U.K. industrial production (which was 2.1% lower in 3Q08 than in 3Q07) and same-store sales in the British Retail Consortium are due also. Swiss unemployment, Japan’s indices of leading and coincident economic indicators, and U.S. pending home sales round out tomorrow’s abundant delivery of fresh information.

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