More Weak Data

June 10, 2011

British industrial production plunged 1.7% on month in April and was 1.2% lower than a year earlier.  Factory output dropped 1.5%.  These monthly changes are much worse than anticipated.  Industrial output in March had only risen 0.2%.  British producer price inflation meanwhile slowed last month, further killing any chance of an early Bank of England rate hike.  Producer output price inflation was 5.3% after 5.5% in April with core falling to 3.4% from 3.6%.  Producer input inflation slowed to 15.7% from 17.9%, as core PPI-I fell to 10.9% from 12.1%.  The Bank of England’s survey of inflation expectations revealed an anticipated 3.9% CPI increase over the coming year, down from 4.0% in the 1Q survey and the first improvement in eight quarters.

French industrial production fell 0.3% in April following a 1.1% drop in March and was 3.9% greater than a year earlier.

Japan’s tertiary index in April (+2.6%) reversed less than half of the 5.9% plunge in March, leaving this measure of service-sector activity 2.4% below its year-earlier level.

China’s trade surplus of $13.1 billion in May was only two-thirds as much as analysts had predicted.  On-year export growth slowed to 19.4% from 29.9% in April and 35.8% in March.  Import growth of 28.4% constituted a four-month high.

On-year Indian industrial production growth of 4.4% in April was down from 7.3% in March and below expectations.

Swedish industrial production fell 0.7% on month in April, trimming the 12-month advance to 12.0% from 14.9%.

Revised data confirmed that Italian GDP only expanded 0.1% last quarter, same as in 4Q10 and sufficiently soft to cut on-year growth to 1.0% from 1.5%.

South African factory output sank 3.7% in April, a much sharper decrease than anticipated, leaving such just 0.4% above a year ago.

Yale Professor Bob Shiller of Case-Shiller fame warned that U.S. house prices might drop as much as 25% further within five years and said a double-dip recession remains possible.

New Zealand credit card spending last month slid 0.1%.

In Euroland, peripheral bond yield premiums relative to German bunds widened again.  The most impressionable lesson learned from yesterday’s ECB press conference was the lack of agreement between the central bank and EU governments over an acceptable revised bailout for Greece and other peripheral members.  The ECB also signaled its intention to raise interest rates next month.

Equities fell 1.8% in Taiwan, 1.1% in South Korea, 0.6% in Singapore and India, 0.5% in Indonesia, 0.8% in Hong Kong and 0.7% in Sri Lanka.  Stocks firmed 0.5% in Japan and 0.3% in Australia and China.  In European trading, the British Ftse is flat, the German Dax is 0.2% firmer, and the Paris Cac has so far lost 0.3%.

The dollar is moderately stronger with gains of 0.5% against sterling, 0.4% versus the euro, 0.2% against the Canadian dollar, and 0.1% against the yuan and Swiss franc.  The Aussie dollar is steady, while the yen has firmed 0.3% in a sign of pervasive risk aversion.

Oil faltered 0.8% to $101.40 per barrel, while gold is steady at $1542.70 per troy ounce.

Yields on ten-year British gilts and German bunds slipped three and two basis points.  The JGB yield is unchanged at a low 1.14%.  The U.S. Treasury yield will open below 3.0% despite another bad monthly budget report due later today.

The Bank of Korea resumed monetary tightening and elevated the priority of securing future price stability.  The key South Korean central bank rate was raised by 25 basis points to 3.25%.  This was the fifth such advance but the first one in three months.  Analyst expectations regarding the Bank’s decision had been mixed.

Peru’s central bank failed to raise its interest rate for the first time in a half year, surprising analysts.  The key interest rate in this rapidly growing Latin American economy remains at 4.25%.

One piece of decent economic news today comes from the Canadian monthly jobs survey.  The unemployment rate fell by two-tenths to 7.4% in May and was accompanied by a 22.3K increase of jobs after a 58.3K upsurge in April.  Growth in average hourly earnings, however, slowed to an on-year pace of 2.0% from 2.5% in April.

Japanese corporate goods prices dipped 0.1% in May, the first drop in eight months.  The CGP index was 2.2% higher than a year earlier, down from a 2.5% 12-month advance in April.

German consumer prices were unchanged in May, the first non-increase since January.  The CPI was 2.3% higher than in May 2010.  Non-energy CPI inflation remained subdued at 1.4%.  German wholesale prices also were unchanged on month, cutting their 12-month rate of increase to 8.9%, lowest since November and down from 9.2% in April and 10.9% in March.  The Bundesbank now expects German GDP to rise 3.1% this year.

Norwegian consumer prices dipped 0.2% in May and recorded a 1.6% rise from a year earlier.  Norway’s PPI for the same month dropped 2.1% but exceeded its year-earlier level by 18.0%.  Danish consumer prices rose 0.2% and 3.1% on year in May.  One of Euroland’s fastest growing members, Finland, reported a 0.5% increase of industrial production in April and an on-year 4.8% rise of retail sales volume.

Prior to the Korean rate advance announcement, South Korean producer prices were reported as being down 0.1% in May from April though up 6.2% from a year earlier.  That was the first on-month PPI decline in eleven months. 

Besides the U.S. Treasury’s monthly budget data release, U.S. import price data are also being reported today.

Copyright Larry Greenberg 2011.  All rights reserved.  No secondary distribution without express permission.

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