Dim Views about Future Growth

July 6, 2012

At 12:30 GMT (08:30 EDT), U.S. and Canadian labor statistics will be released.  Many analysts over the past 24 hours have revised projected U.S. jobs growth upward because of yesterday’s better-than-assumed ADP estimate of private-sector employment.  At the same time, easier monetary policies by the ECB, People’s Bank of China, and Bank of England have dampened hopes for a quick improvement in global demand.  J.P. Morgan’s composite world purchasing managers index in June, reported yesterday, had a reading of 50.3, down from 52.1 in May and signifying near stagnation.

Stock prices are lower in Europe, with drops of 1.4% in Spain, 0.5% in France, and 0.4% in Germany.  The British Ftse has faired better, dipping so far by just 0.1%.  Earlier, Japan’s Nikkei closed 0.7% weaker, and share prices also fell by 0.9% in South Korea, 0.3% in Australia and Taiwan, and 0.2% in New Zealand.  Chinese stocks advanced 1.7%, however.

Oil and gold prices dropped 1.8% to $85.64 per barrel and $1594.30 per ounce.

Ten-year German bund and British gilt yields are unchanged.  The 10-year 0.80% Japanese JGB yield is a basis point lower than on Thursday.

German industrial production data for May (up 1.6% on month and unchanged on year) were much better than anticipated.  However, output in April-May was still 0.1% softer than the first-quarter average level.  Production in April had dropped 2.1%.

Spanish industrial production was 6.1% lower than a year earlier in May after an 8.3% drop in the year to April.  Analysts were looking for a greater decline.

Norwegian industrial production advanced 13.0% between May 2011 and May 2012.  Danish output fell by 8.6% over the same statement year.  Hungarian production was 1.9% higher than in May 2011.

British producer output prices slipped 0.4% in June and to a 12-month increase of 2.3% from 2.9% in the year to May.  Producer input prices dropped by 2.2% on month and 2.3% on year.  Core PPI-O and PPI-I inflation stood at 2.0% and negative 0.1%, respectively last month.

Swiss consumer prices fell by 0.3% on month and 1.1% on year in June.  Both comparisons showed a tad more deflation than expected.  The Swiss franc is quoted at 1.2011 per euro, continuing to hug very close to its policy target ceiling.

France recorded a EUR 5.33 billion trade deficit in May, 7.6% narrower than in April.

Italian Prime Minister Mario Monti’s government approved a greater EUR 4.5 billion of further spending cuts for this year, EUR 10.5 billion of reductions in 2013 and EUR 11.0 billion of cuts in 2014.  Such were slightly more than planned initially.

Japan’s index of leading economic indicators unexpectedly rose in May to a reading of 95.9 from 95.6.  The index of coincident and lagging indicators fell by 1.1 points, however.

Australia’s construction purchasing managers index edged up a tenth of a point to a still highly depressed 34.8.  Such has been lower than 40.0 since January.

Street estimates of U.S. employment growth hover around 105K.  Canada is projected to post a small gain of about 5K in jobs for June.  Many Chinese economic statistics get released next week including second-quarter GDP growth.

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

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