End-Month Data Blizzard and Sterling Strengthens

April 30, 2019

A lot of economic statistics around the world gets released on the final day of each month.

The main market development this Tuesday has been a 0.7% overnight rise of sterling against the dollar, reflecting reports that talks between Prime Minister May and the Labour Party on Brexit have made surprising progress. It remains to be seen if this will lead to a deal that can secure parliament’s approval.

The dollar also fell 0.3% against the euro and yen overnight but is unchanged relative to the Swiss franc, loonie, kiwi and yuan. Among commodities, oil strengthened nearly 2%, and gold firmed 0.2%.

Ten-year sovereign debt yields advanced 5 basis points in the U.K., 4 bps in Germany and 3 bps in France.

Share prices fell 0.7% in Hong Kong, 0.6% in South Korea and 0.5% in Australia, Indonesia, and China. The British Ftse, Paris Cac and German Dax are trading slightly lower.

Euroland GDP climbed by a greater-than-forecast 0.4% last quarter according to the first estimate, and this resulted in an unchanged 1.2% on-year growth rate. Even so, that’s down from 2.4% in the previous four quarters through 1Q18.

French GDP rose 0.3% on quarter and 1.1% on year. Such would have been stronger if not for a 0.3 percentage point drag from net exports.

Italian GDP grew 0.2% on quarter after dipping 0.1% in each of the final two quarters of last year. On-year growth was only 0.1%.

Spanish GDP growth accelerated to a 0.7% quarterly pace, most in five quarters, and a year-on-year advance of 2.4%.

Unemployment in the euro area unexpectedly ticked down 0.1 percentage point to 7.7% in March, which compares to 8.5% in March 2018. Italian joblessness of 10.2% was at a 7-month low. Irish unemployment of 5.4% was the same as in March, which had been the lowest in 11 years.

A big surprise in today’s data was a much greater-than-forecast 1.0% leap in German consumer prices during April, which lifted the 12-month rate of increase from an 11-month low of 1.3% in March to a 5-month high of 2.0%. In separate German data reports, investors learned that the jobless rate stayed at 4.9% last month, that the number of unemployed workers dropped by more than forecast (12K), that there were 1.1% more employed workers in the first quarter than a year ago, that import price inflation rose 0.1 percentage point to a four-month high of 1.7%, and that consumer confidence in May remained at April’s 4-month low level.

French CPI inflation ticked 0.1 percentage point higher in April to 1.2% from March’s 17-month low of 1.1%. Italian CPI inflation also rose 0.1 percentage point to its highest level since December. Spanish CPI inflation of 1.5% in April was up from 1.3% in March and the most since November. Portuguese CPI inflation remained unchanged in April at 0.8%.

French producer price inflation eased 0.2 percentage points to 1.9% in March. Icelandic PPI inflation rose to a 3-month high of 8.2% in March. Austrian PPI inflation eased back to 1.5% in March from 1.6% in January and February and as much as 3.4% last October. Filipino PPI inflation climbed a percentage point to 3.6% in March, and Malaysian producer prices were below their year-earlier level in March for the fifth straight month, this time by 1.5%. Cypriot PPI inflation declined 1.6 percentage points to 3.5% in March.

The Central Bank of Hungary left key interest rate unchanged. The base rate and 1-week and overnight collateralized lending rates have been 0.9% since May 2016. The overnight deposit rate stays at -0.05%, having been raised 10 basis points a month ago in a move that reversed a cut in September 2017. “In its monetary policy decisions, the Council applies a cautious approach, relying mainly on the comprehensive projections for the macroeconomy and inflation in the quarterly published Inflation Report.”

Three Chinese purchasing managers surveys were reported for April. The Caixin manufacturing PMI index slipped 0.6 points to a 2-month low of 50.2. Inflationary pressure lessened, too. The NBS government-compiled manufacturing PMI dipped 0.4 points to a 2-month low of 50.1, implying a near stall, while the non-manufacturing NBS-compiled PMI settled back from a 6-month high of 54.8 to 54.3 in the latest month.

Russia’s manufacturing PMI fell a full point to a 2-month low of 51.8 in April.

British consumer confidence in April was unchanged from its minus 13 readings in both March and February.

Year-on-year South African M3 money growth and private domestic credit expansion accelerated in March to 6.95% and 6.10%.

Over the 12 months through March, industrial production in South Korea fell 2.8%, while retail sales rose 2.4%. South Korean business sentiment touched a 2-month low in April.

Canadian monthly GDP derived from the supply side dipped 0.1% in February and was only 1.1% higher than a year earlier. Industrial production fell 0.4% in the month and was unchanged from its level a year earlier.

Canadian PPI inflation rose 0.3 percentage points to 1.5% in March.

The U.S. employment cost index increased 0.7% last quarter from 4Q18 but decelerated by 0.1 percentage point to 2.8% in year-0n-year terms. The Case-Shiller house price index and Chicago PMI index will be reported later today.

Copyright 2019, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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