Strong U.S., Japanese, Chinese, French and Canadian Data Reported and Brexit Talks Take a Step Forward

December 8, 2017

There have been some impressive stock market advances overnight in Asia (Japan 1.4%, Hong Kong 1.7%, Singapore 1.1%, and India 0.9) and Europe (Italy 1.3%, Germany 0.9%, Spain 0.8% and the U.K. 0.7%). The S&P is 0.4% firmer in early U.S. trading.

The dollar is closing out the week on a high note, having risen today 0.5% relative to sterling, 0.3% versus the yen and 0.2% against the euro.

The ten-year British gilt yield climbed 4 basis points, and its German and U.S. counterparts are a basis point firmer.

West Texas Intermediate crude oil climbed 0.9% to $57.22 per barrel. Comex gold at $1,252.20 per ounce is little changed.

British negotiators worked out a deal with the EU to begin talks on the nature of post-Brexit economic arrangements. This constitutes rare good news for Prime Minister Theresa May.

U.S. non-farm payroll jobs increased more than 200K for a second straight month in November, rising by a greater-than-forecast 228K after a 244K increase in October. The jobless rate stayed at 4.1%. Weekly hours worked ticked up to 34.5 hours. Average hourly earnings rose 0.2% on month and were 2.5% above the year-earlier level.

Japanese quarterly real GDP growth in 3Q got revised upward by 0.9 percentage points to 2.5% annualized. Non-residential investment grew 4.3% instead of 1.0% as estimated initially, and government spending exerted a smaller drag than first thought. Real GDP was 2.1% greater than  in the third quarter of 2016, but the GDP price deflator posted only a 0.1% on-year uptick.

Japan’s economy watchers index went up another 2.9 points to a reading of 55.2 in November, the best in well over a year. Bankruptcies in November were 2.3% fewer than a year earlier in contrast to increases in both September and October.

China’s trade surplus climbed to a 3-month high of $40.21 billion in November on the first double-digit on-year advance of exports since June.

French industrial production in October had been projected to stagnated but instead jumped 1.9% on top of a 0.8% monthly rise in September. This left output in the latest three reported months 1.1% greater than in the prior three months and showing a solid 3.2% on-year increase.

Canadian housing starts swelled to a 67-month peak of 252.2K in November, and capacity utilization in the third quarter of 85.0% was the most in a decade.

The German seasonally adjusted trade surplus of EUR 19.8 billion in October was only a tad less than the January-September average of EUR 20.4 billion per months and last year’s mean of EUR 20.7 billion. Exports fell 0.4% on month but rose by a decent 6.8% on year. The unadjusted current account surplus of EUR 18.1 billion in October compares to a surplus of EUR 18.4 billion a year earlier.German labor cost pressure remained benign last quarter in posting an on-year increase of just 2.2%.

British data reported today were mixed. Industrial production in October was unchanged from September, and construction output registered an unexpected and large monthly slide of 1.7%. However, trade deficits in October of GBP 10.781 billion on merchandise and GBP 1.405 billion on goods and services combined were smaller than assumed.

In the year to November, consumer prices rose 2.8% in Brazil, 2.5% in Hungary, and 1.1% in Greece.

Spain’s indices of leading and coincident economic indicators rose 0.3% and 0.1%, respectively, in October.

Icelandic GDP posted a quarterly 2.2% advance in 3Q that yielded a 3.1% increase from a year earlier.

Turkish retail sales and industrial production recorded October-over-October advances of 2.4% and 7.3%.

The University of Michigan/Reuters index of U.S. consumer sentiment dropped to a 3-month low of 96.8 in December from 98.5 in November and 100.7 in September, reflecting in part the middle class misgivings about the tax cut legislation and Republican intentions to reduce entitlement programs next year. President Trump’s voter approval rating has dropped to a new low of 32%.

Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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