Lots of Japanese Data and Disappointing Retail PMI Scores

December 28, 2012

The dollar extended its 28-month high against the yen to 86.65.  The greenback shows net overnight gains of 0.4% against the euro and Swissie and of 0.1% relative to the yen, kiwi, and sterling.  The loonie and Aussie dollar are steady.  The yuan is 0.2 higher.

Stocks climbed in the Pacific Rim but are lower in Europe.  Equities closed up 1.5% in China, 0.7% in Japan, India and Taiwan, 0.8% in Indonesia, 0.5% in Australia, and 0.4% in New Zealand and Malaysia.  Share prices have dropped 0.7% in Spain, 0.5% in France, 0.3% in Italy and 0.2% in Germany.  The British Ftse is unchanged.

Ten-year British gilt yields dropped three basis points, while the 10-year German bund and Japanese JGB slipped a single basis point each.

Commodities are hardly changed.  Gold is 0.1% lower at $1661.30 per ounce.  The price of oil edged 0.1% higher to $90.99 per barrel.

Deflation lives in Japan.  On-year consumer price deflation was -0.2% in November for all items, -0.1% excluding fresh food, and -0.5% for the conventional concept of non-food and energy core.  Tokyo consumer prices in December was also below year-earlier levels.

Japan’s recession hasn’t ended. Industrial production plunged 1.7% in November and 5.8% from a year earlier.  The monthly drop was about three times greater than forecast.

Japan’s recession is concentrated in manufacturing, whose purchasing managers index fell 0.5 points to a 44-month low of 45.0 in December.  Output and orders fell at their fastest rates in over a year and a half. 

Japanese labor market data were mixed in November.  The jobless rate eased a tenth percentage point to 4.1%.  But labor cash earnings were 1.1% weaker than a year before, accelerating from a 0.4% drop in the year to October.  Employment was 0.1% below its year-earlier level.  The job offers ratio remained at 0.80.

Total retail sales stagnated in Japan during November on a monthly seasonally adjusted basis but posted a 1.3% year-over-year advance.  Large-store sales went up 0.9% on year after back-to-back 12-month declines of 1.0% in September and 3.2% in October.

Real household spending in Japan dipped 0.1% on month after a 0.6% increase in October.  Spending was 0.2% greater than in November 2011.

Euroland’s retail purchasing managers index declined 1.3 points to a 4-month low of 44.5 in December.  The 2012 mean score of 45.5 was the lowest ever in the history of this data series, even below the 2008 and 2009 averages.  The German retail PMI slumped 2.6 points to an 8-month low of 47.6.  France’s index printed at 46.8 after 48.8 in November, but Italy’s 36.8 was at a two month high after scoring 35.5 in November.

French GDP growth last quarter was revised downward to a 0.1% uptick from the second quarter and from 3Q11.  Investment fell, and the boost from net foreign demand was offset by a drag from inventories.  French consumer spending in November outperformed market expectations with a gain of 0.2% from October but a drop of 0.2% from a year earlier.

Italian PPI inflation eased to 2.0% in November from 2.3% in October.

Dutch business confidence improved to a negative 5.7 reading in December after minus 7.0 in October.  Dutch producer prices were 3.7% higher than a year before in November.

Swedish retail sales volume advanced 0.3% in November after tumbling 1.8% in October.  The 12-month increase slowed, however, to 0.9%.  The Swedish trade surplus narrowed sharply to SEK 3.6 billion in November from EUR 7.8 billion in October.  The surplus averaged SEK 6.3 billion per month over the first 11 months of 2012.

Spanish retail sales in November were 7.8% lower than a year earlier on a volume basis.

Austria’s factory purchasing managers index printed in December at 48.1, the sixth sub-50 reading in a row and down 1.2 points from November.  Sub-50 scores connote a contraction of activity.

Russia’s service-sector PMI dropped a full point to a 3-month low of 56.1.  The composite services and manufacturing PMI fell by 2.1 points to 54.1.  These results still signal respectable growth, just not as fast as before.

South Korean industrial production outperformed forecasts, rising 2.3% on month and 2.9% on year in November.  South Korea’s current account surplus widened 18.2% to $6.88 billion in November from the prior month.  Producer prices in Singapore fell 1.7% on month and 4.9% on year in November.

Turkey’s $7.2 billion trade deficit in November was over 30% bigger than the October shortfall but 5% smaller than the deficit in November 2011.

In the U.S., members of the House of Representatives have scheduled a special meeting Sunday evening related to the fiscal cliff talks, which are going down to the wire.  U.S. pending home sales, mid-western PMI regional readings, and the U. Michigan consumer sentiment index arrive today.

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

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