Other Tuesday Developments

March 17, 2009

From Monday closings, the dollar at 19:15 GMT showed narrowly mixed changes, off 0.3% against the euro and up by the same amount versys the yen, compared to Friday closings.  The DOW and Nikkei gained 1.6% and 3.2%.  European bourses lost ground.  So did stocks in Thailand, Indonesia, and India.  But such rose in China, Australia, South Korea, Vietnam, Pakistan, and Taiwan.  Oil is 3.4% higher. Gold slid 0.7%.  Sovereign bond yields advanced.

The German ZEW expectations index posted a fourth straight advance, reaching an 18-month high of -3.5 compared to minus 5.8 in February and minus 53.5 last November. Current conditions are still worsening.  The ZEW indices for Euroland improved 2.2 points to minus 6.5 on the expectations component and 0.3 points to minus 90.7 for conditions.

Swiss industrial production ticked up a tenth last quarter but fell 5.9% from the fourth quarter of 2007.  Orders and sales posted on-year drops of 8.8% and 1.7% in the quarter.  Inventories climbed.  Swiss officials do not expect deflation.

In Britain the house price index of the Department of Communities and Local Government fell by a sharper 11.5% in the year to January after a decline of 10.2% in the year to December.  Dutch retail sales advanced 2.3% in the year to January. Spanish home sales plunged 38.6% in the year to January.  Finnish producer prices dropped 4.6% in the year to February.

Japan’s revised estimated output gap last quarter reached 4.1%.  Officials now assume that potential non-inflationary GDP growth only advances at a 1% per annum rate.  The Bank of Japan issued a statement part-way through its two-day Policy Board meeting, confirming plans to make Y 1.0 trillion of subordinated loans to help recapitalize Japanese commercial banks.

Canadian labor productivity fell 1.1% in 2008, its first calendar year decline since 1996.  Canadian productivity also posted drops of 0.5% between 3Q08 and 4Q08 and 1.2% between the fourth quarters of 2007 and 2008.  Canadian productivity increased just 0.7% per annum in the five years to 2008, a third as much as U.S. productivity grew.  In U.S. dollar terms, Canadian unit labor costs fell 14.8% between 4Q07 and 4Q08.  U.S. unit labor costs went up 1.8% in the same period.  In contrast, the U.S. had a huge advantage in the five years to 2008, as its unit labor costs increased 1.9% per annum versus a 9.4% annualized pace in Canada when translated into U.S. dollar terms.

Canadian factory sales plunged 5.4% in January and by 56% at an annualized rate in the three months between October and January. Sales of motor vehicles and auto parts respectively tumbled 46.3% and 27.1% in January. Manufacturing orders fell 6.7% in the latest month and by 74% annualized over the three most recently reported months.

U.S. producer prices edged only 0.1% higher in February and posted an on-year decline of 1.3%.  Core PPI inflation remained at 4.0%, however.  U.S. housing starts provided the day’s major surprise, rising in February by 22.2%. Chain store sales remained soft in the week of March 14th.

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


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