Australian Labor Market Shocker, Chinese Price Data, and Four Central Bank Decisions

September 11, 2014

Australian employment shot up by a record 121,000 workers in August, propelled by a 106.7K advance in part-time positions.  The Jobless rate fell for the first time since April and to 6.1% from 6.4%, while the labor participation rate climbed 0.4 percentage points to a 16-month high of 65.2%.  Analysts had projected only an 18K rise in jobs following a 4.1K decline in July.

Chinese CPI inflation slowed to a 4-month low of 2.0% in August from 2.3% in both June and July.  While food costs recorded a 3% on-year advance, other consumer prices were just 0.2% firmer.  Producer prices fell 1.2% in the year to August, their 30th sub-zero pace in a row and a larger on-year drop than in either June or July. 

Chinese M2 money growth slowed to a 5-month low of 12.8% on year in August.

The Reserve Bank of New Zealand retained a 3.5% Official Cash Rate, breaking a streak of four 25-bp hikes in a row.  See review.

Bank Indonesia’s benchmark interest rate was left at 7.5%, its level since a 25-basis point hike in October 2013 that culminated 175 basis points of tightening over four months. 

The National Bank of Serbia kept its key interest rate at 8.5%.  There were cuts of 50 basis points each in May and June.  Before that the rate fell to 9.5% by end-2013 from 11.75% in April 2013.

Bangko Sentral ng Pilipinas hike the Filipino central bank rate by 25 basis points to 4.0%.  A similarly-sized increase at end-July was the first tightening since May 2011.  In 2012, four cuts were engineered.  The Special Deposit Account rate also has been lifted by 25 basis points today.

The dollar is unchanged against the the euro, Swiss franc, and yuan.  It’s appreciated 1.2% versus the loonie, 0.4% against the Australian dollar, 0.3% vis-a-vis  the kiwi and 0.2% relative to the yen but is 0.2% softer against sterling.  New Zealand monetary officials released a statement that called the kiwi’s level “unjustified and unsustainable” in light of falling export commodity prices.

Share prices in the Pacific Rim fell by 0.7% in South Korea, 0.5% in Australia, 0.4% in China and Taiwan, and 0.2% in India and Indonesia.  But Japan’s Nikkei and equities in New Zealand rose by 0.8% and 0.5%, respectively.  In Europe, stocks are very narrowly mixed.

The 10-year Japanese JGB yield firmed two basis points, while its German counterpart slipped a basis point.  British gilts are steady.

Oil and gold prices fell by 0.6% and 0.4% overnight to $91.08 per barrel and $1,244.80 per ounce.

Japan’s Ministry of Finance released findings of its quarterly corporate survey.  The gauge of business conditions printed 25.7 points higher at +11.1 in September and is expected to be 9.9 in the December survey.  The manufacturing sentiment index of 12.7 was at a 1-year high.  Non-manufacturing posted a 10.2 score in September.  Projected capital spending this fiscal year was revised higher to 5.7%.

Japanese stock and bond transactions last week generated a net JPY 436 billion capital inflow, almost reversing an outflow of JPY 491 billion in the prior week fully.

German CPI inflation was confirmed at the flash estimate of unchanged on month and 0.8% on year in August.  Energy fell 1.9% on year, while all other consumer prices were up by 1.2%.

French consumer prices increased 0.5% both from July and compared to August 2013.

The Royal Institute of Chartered Surveyors in Britain saw its home price index fall to 40% in August from 49% the month before.  A new Scottish opinion poll suggests the independence vote on the 18th of this month will be narrowly defeated.

Swedish consumer prices fell 0.1% on month and 0.2% on year in August.  The core rate was only 0.5%.

Turkey’s current account deficit narrowed 35.1% in August. 

Malaysian industrial production in July was weaker than assumed, dropping 3.8% on month and rising just 0.5% on year.

On the eve of the 13th anniversary of the Al Qaeda attacks against the World Trade Center and Pentagon, U.S. President Obama announced an expansion of air strikes against ISIS, which he called ISIL (Islamic State of Iraq and the Levant) as a first step in a long-range plan to first degrade and ultimately destroy this terrorist organization.  He spoke of a joint effort with several allies and urged congressional support.

The U.S. reports its monthly budget and weekly jobless insurance claims today, while Canada releases home price figures.

Copyright 2014, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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