Japanese GDP Data Weaker than Forecast

August 12, 2013

The dollar opened this week with gains of 0.6% against the yen and Swissie, 0.4% versus the Aussie and New Zealand dollars, 0.3% relative to the euro, 0.2% vis-a-vis the loonie and 0.1% against sterling.  The yuan matched the U.S. currency’s advances.

Stocks in the Pacific Rim closed mixed, with drops of 0.9%, 0.7% and 0.3% in Indonesia, Japan and New Zealand but gains of 2.9% in China, 2.1% in Hong Kong, 1.1% in Australia and 0.8% in India.  In Europe, equity losses have so far been recorded of 0.7% in Germany, 0.4% in France, 0.3% in Britain and Italy, and 0.2% in Spain.

Commodity prices are higher.  Gold jumped 1.1% to $1327.30 per ounce, and WTI crude oil is up 0.1% at $106.08 per ounce.

Ten-year British gilt and Japanese JGB yields rose by two and one basis points.  German bunds are steady.

Japanese GDP growth decelerated to an annualized 2Q-over-1Q pace of 2.6% from 3.8% in the first quarter.  Business residential and non-residential investment fell 1.0% and 0.4%, and inventories cut the GDP growth rate by 1.1 percentage points, neutralizing a 1.1 percentage point boost from government spending.  Analysts had predicted GDP growth of around 3.5%.  GDP was only 0.9% higher than a year earlier.

Japan’s GDP price deflator posted an on-year dip of just 0.3%, smallest since the third quarter of 2009.

A top advisor to Prime Minister Abe doesn’t think Japan’s economy will be ready for a 3 percentage point sales tax hike to 8% as soon as April 2014.

Japanese industrial production fell 3.1% on month and 4.6% on year in June according to revised figures that also revealed a 5.9% monthly leap in the inventory ratio and a 2.3% drop in capacity usage.

Japanese machine tool orders recorded a 12-month 12.1% decline in July, similar to a drop of 12.4% between June 2012 and June 2013.

Japanese corporate goods price inflation rose to 2.2% in July from 1.2% in the year to June.  This acceleration was led by oil and coal products, whose prices went up 2.1% on month and 16.8% on year.

GDP growth in Singapore was revised to an on-year 3.8% pace in 2Q from 3.7% reported initially.  That’s considerably better than the 0.2% gain recorded in the year to 1Q.

India’s trade deficit of $12.27 billion in July was smaller than analysts feared because of quickening export growth of 11.6% from a year earlier.

Food prices in New Zealand rose just 0.9% in July from a year earlier.

Turkish industrial output grew 1.4% on month and 4.2% on year, beating expectations.  Production in 2Q was 1.2% greater than in 1Q and 2.9% higher than a year before.

Investors were heartened by news that Greece’s 6-year-long recession has lessened. GDP fell 4.6% in the year to 2Q after a 5.6% drop in 1Q from a year earlier.  Greece also reported a primary budget surplus.

Swiss retail sales volume was 2.3% greater in June than a year before, quickening from a 12-month 1.5% advance in May.

Ireland’s construction purchasing managers index improved 4.2 points to 47.6 in July but remained below the 50 no-change threshold.

On-year Danish CPI inflation of 0.6% in July constituted a record low.  Portuguese consumer prices only rose 0.8% in the year to July, down from 1.0% in the year to June. 

A EUR 3.48 billion Dutch trade surplus in June was much larger than a year earlier but less than May’s surplus of EUR 4.6 billion.  France registered a smaller EUR 1.4 billion current account deficit in June versus EUR 3.5 billion posted in May. 

U.S. July federal budget data will be reported later today.

Copyright 2013, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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