Month-End Flood of Economic Data

January 29, 2010

Markets remain worried about the Greek deficit but are showing somewhat less risk aversion today.  The yen fell 0.4% against the dollar, which is otherwise weaker by 0.6% against the kiwi, 0.4% versus the Swiss franc, 0.2% relative to the Canadian dollar, and 0.1% against the euro.  EUR/USD remains below $1.4000, while dollar/yen is hovering just above 90.0.  Trichet again endorsed the U.S. strong dollar policy, revealing no concern over the euro’s recent depreciation.

European stocks have traded up with gains of 1.0% in Germany, 0.9% in France and 0.8% in Great Britain.  Asian stocks had a rougher time, posting losses of 2.1% in Japan, 1.2% in Hong Kong, and 2.4% in South Korea.  The Australian bourse lost 2.2%.

The ten-year British gilt yield is somewhat lower, while the JGB yield is steady at 1.32%.

Oil climbed 0.5% to $74.00 per barrel. Gold is steady at $1084.70 per troy ounce.

The following Japanese data results were announced:

  • The manufacturing PMI slid 1.3 points to 52.5 in January from 53.8 in December.  Export orders printed at 51.5 after 54.7.
  • Total and core consumer prices posted December-over-November declines on a seasonally adjusted basis.  Core CPI in on-year terms fell 1.3% both in December and full-2009.  That was the largest calendar year drop thus far.
  • Tokyo consumer prices in January fell on month by 0.2% seasonally adjusted.  Tokyo’s on-year core CPI rate was minus 2.0%.
  • Housing starts fell on year by 15.7% in December after a 19.1% drop in the year to November.
  • Construction orders reverted to a 12-month uptick of 0.6% from a drop of 11.6% in the year to November.
  • December’s jobless rate of 5.1% was two-tenths less than forecast and down from 5.2% in November.  Employment was 1.7% lower than a year earlier, and the job offers-to-seekers ratio improved to 0.46 from 0.43 in November and a recent low of 0.42 last July and August.
  • Real household spending jumped on month by 1.0% in December on a seasonally adjusted basis and recorded an on-year increase of 2.1%.  But among workers, real disposable income and real household incomes registered 12-month declines of 4.7% and 4.8%.
  • Industrial production provided another bright spot, increasing 2.2% for a second straight month in December and by 5.3% from a year earlier.  In the year between 1Q08 and 1Q09, industrial production had plunged 34.6%, and a large 22.4% decline was posted in 2009 as a whole after a drop of 3.4% in 2008.  Officials predict increases in industrial output of 1.3% in January and 0.3% in February, thanks to solid regional export demand.
  • The inventory ratio in December was 18.3% less than a year earlier.  Such leaped 52.6% between the first quarter of 2008 and 1Q09.

Private credit in Australia grew 0.3% in December and 1.5% from a year earlier.  Credit to households rose, but that to businesses eased.

New Zealand building permits fell 2.4% last month, printing much worse than expectations of a 3% increase.  RBNZ Governor Bollard made some dovish remarks about New Zealand interest rates.  New Zealand’s trade balance in December was better than forecast.

As a preliminary step for a future interest rate hike, the Reserve Bank of India announced a two-stage 75-basis point increase in cash reserve requirements from the present 5.0% to 5.5% on February 13 and 5.75% on February 27th.  Analysts expected such to be raised by a smaller amount.  The key repo rate was left at 4.75%, and the reverse repo rate stays at 3.25%.

In Asia, China’s central bank reiterated obtuse plans to pursue a moderately loose monetary policy while observing that inflationary pressure is likely to rise in 2010.  Taiwan’s jobless rate edged down to an 11-month low of 5.74% in December from 5.86% in November. Thailand reported an improved business sentiment index of 50.4 in December after 49.0 in November, noting too that factory output in December was 35.7% higher than a year earlier.  Hong Kong M3 growth slowed to 10.5% in December.  Hong Kong producer prices edged up 0.1% in December and were 1.3% above year-earlier levels.  Singapore’s jobless rate dived to 2.1% last quarter from 3.4% in 3Q.  Bank of Japan minutes from its December meetings revealed nothing startling.  South Korea’s index of leading economic indicators firmed to 12.8% in December from 12.6% the month before.  South Korea also reported a 3.5% jump in industrial production last month and a whopping 33.9% increase from December 2008.

In the euro area, the preliminary CPI estimate for January was a 12-month rate of 1.0%, less than forecast but a tick above December’s 0.9% result.

Euroland unemployment climbed to 10.0% in December from 9.9% in October and November.  Unemployment had been at 8.2% at end-2008 and 7.2% at end-2007.  The rise last year was held down by German job creation schemes.  German joblessness only advanced four-tenths to 7.5%.  By contrast, unemployment increased by 1.5 percentage points in France and Italy and by 4.7 percentage points in Spain between end-2008 and end-2009.  Euroland’s household savings rate fell to 13.0% last summer from 19.8% in the second quarter of 2009.

Euroland M3 fell 0.2% between December 2008 and December 2009 and by 0.1% between 4Q08 and 4Q09.  Loans to firms were 2.3% less than a year before in December, while lending to households went up by 1.3%.  Private credit expanded just 0.7% in the latest 12-month period.  ECB officials expect subdued inflation to persist into the medium term because of the very low growth of money and credit.  The ECB also indicated, however, that credit conditions in the market were somewhat less restrictive last quarter than in 3Q.

Swedish wages were 2.8% higher in November than a year earlier, similar to October’s pace of 2.6%.  Norwegian retail sales volumes rose 0.8% in December and were 3.9% greater than at the end of 2008.

Italian producer prices rose 0.2% in December but fell 1.6% from a year earlier.  Italy’s 8.5% jobless rate in December exceeded expectations.

Greek retail sales were 9.0% lower in November than a year earlier.  The Swiss index of leading economic indicators printed at 1.77 in January, better than forecast.  Spanish consumer price inflation accelerated to 1.1% in January from 0.9%.

Hungarian producer prices firmed 0.1% in December and 1.3% from a year earlier.  Czech industrial output in December was 2.1% greater than a year before.

British consumer confidence rose two points in January to minus 17.  The U.K. Nationwide house price index recorded an on-year advance of 1.2% in December, up from 0.5% in November.

The data parade isn’t over.  The United States releases its first estimate of fourth-quarter GDP, seen arriving at around 4.5%, as well as the employment cost index, Chicago PMI, and U. Michigan index of consumer sentiment. Canada announces producer prices and monthly GDP.

South Africa’s central bank reported an on-year drop of 0.8% in credit and a 1.6% rise of M3 in December.

Copyright Larry Greenberg 2010.  All rights reserved.  No secondary distribution without express permission.


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