A Focus on China and Japan
June 10, 2013
Released Chinese data were not as good as expected.
- Export growth slowed to a 1.0% on-year pace in May, which was a 10-month low. Imports were 0.3% lower than in May 2012, and the trade surplus of $20.4 billion was close to expectations.
- Industrial production growth edged lower to 9.2%. Analysts were predicted 9.3%, same as the pace in the year to April.
- Bank lending slowed to CNY 669 billion, a 3-month trough, from 730 billion yuan in April and 1.06 billion yuan in March. M2 money growth slowed to 15.8% from 16.1%.
- Producer prices recorded their largest on-year decline (2.9%) since September.
- Consumer prices fell by 0.6% on month. The 12-month increased fell back to 2.1%, same as March’s 4-month low, from 2.4%.
- Fixed asset investment slowed to an on-year gain of 20.4% in January-May from 20.6% in the first four months of 2013.
- Retail sales growth of 12.9% followed 12.8% in April. The pace averaged 15.1% in October-January.
- Market reaction to these figures was muted by the Dragon Boat Festival.
Japan’s Nikkei-225 soared 4.9%, dollar/yen rose 1.2%, and the 10-year JGB yield fell by 0.3% in response to some data but mostly in reaction to Prime Minister Abe’s proposed tax incentives to boost business spending. The Bank of Japan began a two-day Policy Board meeting on Monday. Today’s data showed
- A third straight Japanese current account surplus of JPY 750 billion not seasonally adjusted. The seasonally adjusted surplus of JPY 853 billion was more than twice expectations and at a 14-month peak. The unadjusted trade deficit of JPY 819 billion exceeded expectations, however, and embodied on-year growth of 9.0% in imports but just 2.7% in exports.
- Japanese GDP growth last quarter was revised upward to 4.1% at a seasonally adjusted annual rate from 3.5% reported last month. That’s an acceleration from quarterly growth of 1.2% in 4Q12. GDP was 0.4% higher than in the first quarter of 2012. The GDP price deflator fell by 1.1% on-year, a tad more than the 1.1% drop in the year to 1Q12.
- The economy watchers index slid 0.8 points to a reading of 55.7 in May. The outlook component slipped to 56.2 from 57.8 in April but remained will above the 51.0 level at end-2012.
- Stock and bond transactions in May generated a 3.5 trillion yen net capital inflow in May, thanks mainly to JPY 2.5 trillion of net sales of foreign bonds by Japanese folk.
- Consumer confidence in Japan improved to a reading of 45.7 in May from 44.5 in April, 39.9 in December and 40.2 last September.
- On-year bank lending growth (excluding trust accounts) remained steady in May at 2.1%, while total bank lending ticked up to 1.8% from 1.7% in April, 1.4% in the first quarter and 1.0% in the final period of 2012.
- Bankruptcies posted a smaller on-year drop of 9.0% in May than the 10.5% drop in the year to April.
Australia was closed to observe the Queen’s Birthday holiday.
Bank Rossii, the central bank of Russia retained an 8.25% refinancing rate but cut the one-year repo rate by 25 basis points to 7.25%. Investment has been soft, and growth risks on the downside appear to have become more pressing.
The dollar is unchanged against the euro, loonie, and yuan, up 0.7% relative to the Australian dollar, up 0.2% against the Swissie and sterling, and up 0.1% versus the kiwi.
Share prices increased 2.6% in the Philippines, 0.8% in New Zealand and Taiwan and 0.5% in South Korea but fell by 1.8% in Indonesia and 0.7% in Vietnam. In Europe, the German Dax climbed 0.9%, but the Paris Cac and British Ftse are unchanged. Equities firmed a tenth percent in Spain and edged down that minuscule amount tin Italy.
The yield on 10-year British gilts rose three basis points.
Commodity prices fell. Copper, oil and gold lost 1.0%, 0.5%, and 0.3%.
Several countries reported industrial production.
- French production growth of 2.2% on month in April with a 1.8% drop on year easily beat expectations.
- Italian production dropped 0.3% versus March and by 4.6% from a year earlier after a 5.3% 12-month decline in March.
- Finnish production plunged 9.7% on year, most since last October.
- Greek production fell 1.8% in the year to April versus 1.1% in the year to March.
- Turkish production grew 1.3% from March and 3.4% on year.
- Swedish industrial output fell 0.5% in April and by a working day-adjusted 0.8% from April 2012.
The Sentix measure of investor sentiment toward the euro area improved four points from May and 5.7 points from March to a negative 11.6 reading in June.
The Bank of France business sentiment index stayed at 94 in June instead of ticking up to 95 as many anticipated.
The Czech jobless rate of 7.5% in May was down from 7.7% in April and 8.0% in March. Seasonally adjusted Swiss unemployment edged up a tenth percentage point to 3.2%. The volume of Swiss retail sales advanced 1.4% on month and 3.3% on year in April. New Zealand’s manufacturing activity index fell 0.6% between 4Q12 and 1Q13 and was merely 0.2% higher than a year before.
Italian GDP, according to revised figures, fell by 0.6% last quarter and 2.4% from the first quarter of 2012.
The Irish construction purchasing managers index printed in May at 42.0, which was between 41.9 in April and 43.1 in March. February’s 45.3 reading was considerably higher. The Danish current account surplus spiked to DKK 9.8 billion in April from DKK 0.4 billion in March.
Czech PPI inflation fell to 1.3% in May from 1.7% in April. Danish CPI inflation stayed below 1% at 0.9% in May. Greek consumer prices were 0.4% lower than a year before in May. Norwegian CPI inflation of 2.0% in May versus 1.9% in April surpassed expectations, dampened hopes of a central bank rate cut and bolstered the Norwegian krone overnight. New Zealand house price inflation stayed at 7.1% in May.
No U.S. data are scheduled today. Canada reports housing starts.
Copyright 2013, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Bank Rossii, BOJ, Chinese data, Japanese GDP
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