Japanese GDP, Greek Debt Negotiations, and Holiday Closures in North America

February 16, 2015

The 2.2% annualized rise of Japanese real GDP last quarter merely reversed the third-quarter drop and left its level almost 7% lower than in the first quarter.  Real GDP for the year was flat compared to the average 2013 level, and the GDP price deflator’s 2014 increase of 1.6% was only half the size of last April’s consumption tax hike.  Analysts were anticipating a stronger 3.7% annualized rebound of real GDP in 4Q.  In the quarter, personal consumption grew 1.1% at an annualized rate, while housing construction fell 4.8%.  Other business investment and public sector demand rose 0.4%.  The rise of GDP stemmed mainly from inventories and net foreign demand.  Real GDP was 0.5% lower than in the final quarter of 2013.  See deeper analysis of the GDP results.

Various back-channel efforts over the weekend to find common ground between the newly elected Greek government and that countries creditors produced essentially no progress.  Eurozone finance ministers meet today and tomorrow in Brussels.  Greek sovereign debt yields shot up today; for example, the 3-year note is over a percentage point above Friday’s level.  Share prices in the Athens Stock Exchange have slumped 3.4% further.

U.S. markets are closed today for President’s Day.  Canada Day was yesterday, and many regions, including Toronto, the country’s financial center, will be shut today. 

Ukraine’s ceasefire seems to be holding.  Egypt bombed ISIS-held areas in Libya.

The dollar has fallen 0.7% against the kiwi and also shows small losses of 0.2% against the Aussie dollar and yen and 0.1% relative to the euro, loonie and Swiss franc.  Sterling dipped 0.1% against the greenback.

Japan’s Nikkei advanced 0.5% in spite of the disappointing GDP data.  In other bourses in the Pacific Rim, stocks climbed 0.9% in China, 0.4% in Taiwan and 0.2% in Australia and Hong Kong but lost 0.9% in Indonesia and 0.5% in New Zealand.  In Europe besides the aforementioned debacle in Greece’s market, equities are up 0.7% in Switzerland, 0.3% in Spain and 0.2% in Italy but down 0.3% in Germany and 0.2% in Britain.  The Paris Cac is unchanged.

Ten-year sovereign debt yields have risen three, two, and one basis points, respectively, in Britain, Japan, and Germany.

WTI oil and Comex gold are 0.4% and 0.5% higher today at $52.97 per barrel and $1,233.60 per ounce.

December’s rise in Japanese industrial production was revised downward by 0.2 percentage points to 0.8%.  Output went up 1.7% last quarter but was 1.5% lower than the level in the final quarter of 2013.  Output increased 2.0% in 2014 as a whole.  Capacity utilization in December increased 2.0% on month and 1.5% on year, while capacity edged up 0.1% but stayed 2.2% lower than a year before.

Paced by a 3.4% advance in autos and auto parts, New Zealand retail sales growth last quarter rose more than forecast.  Volume jumped by 1.7%, matching the best quarter since mid-2012.  Value rose 1.6% on quarter and 4.7% on year.  New Zealand’s January purchasing managers index for services improved 1.1 points to 57.8 compared to readings of 55.2 in November and 56.7 in December.

New motor vehicle sales in Australia retreated 1.5% last month and were merely 0.2% higher than in the first month of 2014.

The eurozone seasonally adjusted trade surplus widened some 8% to EUR 23.3 billion, which was the best level in the second half of 2014.  Both exports (down 1.1%) and imports (-2.4%) fell on month.  The full-2014 surplus of EUR 194.5 billion was 28% bigger than the 2013 surplus, embodying a 2.3% rise of exports but just a 0.1% uptick in imports.

Great Britain’s Rightmove house price index showed a smaller 6.6% 12-month rate of increase in February versus 8.2% in the year to January.

Dutch retail sales increased 4.0% between end-2013 and end-2014.  Danish producer prices fell by a larger 5.0% in the year to January versus a drop of 4.3% in December.  Norway, an oil producer, saw a 43.5% on-year slide in the trade surplus to NOK 27.1 billion in January.

India reported the second on-year decline of wholesale prices in the past three months.  The WPI was 0.4% lower in January than a year earlier due mainly to a 10.7% plunge in the energy component.

Chinese foreign direct investment rose by a strong 29.4% between January 2014 and last month.

Real GDP in Thailand expanded 1.7% last quarter (7.9% annualized), raising on-year grotwh to 2.3% from 0.6% in 3Q.

Indonesia reported a better trade balance of $710 million in January than forecast.  Imports tumbled 15.6% on year.

Copyright 2015, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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