Data Releases Mixed and Plentiful

June 21, 2012

The formal Declaration of G20 Leaders, who met earlier in Los Cabos, Mexico, is big on general objectives but sparse on detailed actions.

The FOMC Statement accentuated the U.S. economy’s increasing softness, but the stimulus of a 6-month continuation of Operation Twist did not surpass expectations.  Stocks were mostly lower overnight.

New Democracy leader Samaras was sworn in as Greece’s new prime minister.

Politicians in Germany are said to have forged an agreement on the EU fiscal compact and use of the ESM facility.

Final results of the presidential election in Egypt last Sunday were expected by today but have still not been reported.

British data released today are better than expectedChinese and euro area releases are disappointing.  Lots of U.S. releases to come later today.

The dollar has risen by 0.5% against the yen, 0.2% versus the euro, Swissie, loonie and Australian dollar, and 0.1% against the yuan.  The dollar slid 0.3% relative to the kiwi, which was buoyed by a better-than-anticipated New Zealand GDP report.

Equities fell by 1.6% in China, 1.3% in Hong Kong, 1.1% in Australia and Indonesia, 1.0% in New Zealand, 0.8% in South Korea and Taiwan and 0.7% in the Philippines.  Share prices rose 0.8% in India and Japan but so far show drops of 0.6% in Britain, 0.5% in Paris and Frankfurt and 0.2% in Spain.

Oil declined yet another 1.0% to $80.60 per barrel, and gold slumped 1.0% as well to $1600.00 per ounce.

Ten-year sovereign debt yields slid by three basis points in Britain and a basis point each in Germany and Japan.

New Zealand real GDP increased 1.1% last quarter, most since the first quarter of 2007, and by 2.4% from a year earlier, the greatest on-year advance in seven quarters.  The quarterly increase was almost twice as great as had been anticipated.  It was also nearly three times faster than the 0.4% pace in 4Q11.

Japanese stock and bond transactions generated a JPY 360 billion net capital inflow last week, somewhat less than the JPY 402 billion inflow in the week of June 9.  Hong Kong CPI inflation slowed to a 15-month low of 4.3% in May from 4.7% in April.  Hong Kong’s current account surplus collapsed to HKD 1.7 billion in 1Q12 from HKD 20 billion in the final quarter of 2011. Malaysia’s 3.0% jobless rate in April was the same a year earlier.

British retail sales rebounded 1.4% in May from a 2.4% drop in April and were 2.4% higher than in May 2011.  Non-fuel sales increased 0.9% on month and 3.0% on year.  The CBI monthly survey of British industrial trends improved by six points to a reading of minus 11 in June; however, the 2Q average of minus 12 was three points worse than the first-quarter mean score.

Flash Euroland PMI results for June depict a deepening downturn and one that is spreading to Germany.

  • The composite purchasing managers index of the whole euro area of 46.0 matched May’s 35-month low.  The manufacturing component slid further below the 50 no-change line to 44.8 from 45.1 in May and included the greatest rate of production decline in 37 months.  The services PMI edged up 0.1 of a point to 46.8.  The average composite PMI of 46.2 in the second quarter suggests that real GDP fell about 2.5% at an annualized rate.
  • Germany’s composite PMI declined 0.8 points to a 36-month low of 48.5 and averaged 49.4 in 2Q, suggesting slightly negative GDP growth in the quarter.  Manufacturing slid to 44.7 from 45.2 in May, while the services PMI of 50.3 was 1.5 points lower than in May.  Business confidence in the private sector recorded a record month-to-month deterioration.  Export demand weakened discernibly in June.
  • Despite a 2.1-point rebound to 46.7 in France’s composite PMI score, the 2Q average of 45.7 implies the French growth weakened at the sharpest rate in over three years.  The manufacturing and service-sector readings in June were respectively 45.3 and 47.3.

The HSBC-compiled purchasing managers index for China was below 50 for an eight straight month, printing at a disappointing 48.1, down from 48.4 in May and 49.6 in March.  The production component slid 0.6 points to 49.1.  Domestic demand was soft.  China’s central bank finally cut interest rates earlier this month, but investors wonder if they acted too late for the world economy’s good.

Euroland recorded an April current account surplus of EUR 4.6 billion seasonally adjusted after spiking to EUR 10.3 billion in March.  The unadjusted current account over the past dozen reported months accrued to a surplus of EUR 17.6 billion versus a deficit of EUR 16.7 billion in the previous year to April 2011.

The Swiss trade surplus almost doubled on month to CHF 2.49 billion in May as import volumes stagnated while real exports rose nearly 2%.  Dutch unemployment remained at 6.2% last month.  Icelandic wages in May were 11.0% higher than a year earlier.

Scheduled U.S. data today feathre existing home sales, the Philly Fed manufacturing index, the preliminary manufacturing purchasing managers index compiled by Markit Economics, the FHFA monthly house price index, the index of leading economic indicators, and weekly jobless insurance claims.  Canada will be reporting retail sales and its index of leading economic indicators.  The preliminary gauge of euro area consumer confidence arrives, and so does the latest interest rate decision from the Central Bank of the Republic of Turkey.  Canada’s central bank governor speaks publicly.

Copyright 2012, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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