Many Industrial Production Reports as Well as U.S. Jobs Day

January 10, 2020

Markets marked time ahead of the U.S. December labor market statistics. The dollar didn’t react much afterward, either.

As of 08:10 EST, the dollar was up 0.2% against the Swiss franc and 0.1% relative to the euro and yen. The greenback was unchanged vis-a-vis the loonie and kiwi but down by 0.3% against the peso and Aussie dollar and 0.1% versus sterling and the yuan.

Share prices advanced 0.9% in South Korea, 0.8% in Australia, 0.5% in Taiwan and Japan, 0.4% in India, and 0.3% in Singapore. European equities and U.S. futures were also up a bit.

10-year U.S., German and Japanese sovereign debt yields were unchanged. The 10-year British gilt yield had slipped two basis points.

The price of WTI oil had firmed 0.2%, whereas gold was 0.3% lower.

Two central banks had left interest rate benchmarks unchanged.

  • The Bank of Israel’s policy rate stayed at 0.25% and, according to a released statement, will probably remain low for a “prolonged period.” Inflation is low, and the shekel is steady lately but up compared to a year ago.
  • The reference rate of the Central Bank of Peru was kept at 2.25%. Officials expect CPI inflation to hover near 2.0% throughout the policy forecast period. Expected inflation is contained, the primary industries are soft, and global risks prevail.

Industrial production in France rose in November for a third straight month and was 1.3% higher than in November 2018. That’s the biggest on-year advance since May.

Industrial production in Italy edged up 0.1% in November. A 0.6% on-year drop was the smallest decline in a half year.

Spanish industrial production jumped 1.0% in November, most since April, resulting in the largest 12-month rate of increase (2.1%) in ten months.

Malaysian industrial production grew 2.0% on year in November, a 6-month high.

Finnish on-year industrial production growth accelerated to a 3-month high of 3.7% from 1.3% in October and 1.2% in September.

A streak of three months of on-year declines in Indian industrial production was broken in November. The 12-month 1.8% rise followed a 4.0% on-year drop in October.

Mexican industrial production rose 0.8% in November and posted a smaller 2.1% on-year decline than October’s drop of 3.0%.

Czech industrial production dropped by 1.1% in November and recorded the largest on-year slide (3.2%) since June.

Danish industrial production fell 5.3% on month and 5.9% on year in November, breaking a string of four months with on-year rises.

Japanese real household spending in November was 2.0% less than a year earlier. In October when the national sales tax had been raised, such posted a 5.1% on-year slide after a 9.5% increase the month before the tax.

Japanese international reserves increased $6.428 billion last month and by $52.8 billion over the course of 2019.

Japan’s index of leading economic indicators fell 0.7 index points to a 10-year low in November. The index of coincident economic indicators edged downward to its weakest level since February 2013, prompting officials to retain a trend designation of “worsening” for a fourth straight time and the sixth month from the past nine reports.

In Australia before the wildfire catastrophe, retail sales climbed 0.9% in November on month and by the most (2.9%) on an on-year basis in seven months. However, Australia’s AIG-compiled service sector purchasing managers index slumped 5.0 points to a 5-month low of 48.7 in December.

Norwegian CPI inflation slowed to a 23-month low of 1.4% last month. Danish CPI inflation of 0.8% was at a 9-month high, in contrast, and Brazilian CPI inflation of 4.3% was at a 7-month high and well above October’s recent low of 2.54%.

Swiss unemployment on a seasonally adjusted basis rose to a 10-month high of 2.5% in December.

The Bank of France reaffirmed its forecast that GDP likely rose 0.2% last quarter after releasing business sentiment indices that showed lessening service sector confidence, an unchanged mood in manufacturing and an uptick in construction sector sentiment.

Despite an unchanged  jobless rate of 3.5% and a lower un- and underemployment rate of 6.7% in December, the monthly U.S. labor force survey painted an overall softer-than-forecast picture. Non-farm payroll jobs went up by only 145k in December, which was slightly less than forecast and over 100k below November’s job creation total, and there was a 14k downward revision to the October-November combined total. Also, average hourly earnings grew 0.1% on month. This was less than expected and kept its 12-month rate of increase below the 3.0% psychological level.

Canadian unemployment fell 0.3 percentage points in December to 5.6%, and jobs growth of 35.2k exceeded analyst expectations. However, on-year hourly wage growth fell by a much greater-than-forecast 0.6 percentage points to 3.8%.

Governor Poloz of the Bank of Canada worries that the damage inflicted by current trade frictions may endure. NY Fed President Williams expressed concern that inflation expectations may trend further downward, and Chicago Fed President Evans, while indicating satisfaction with the current policy stance of the Fed, wouldn’t rule out additional stimulus if conditions weaken.

Copyright 2020, Larry Greenberg. All rights reserved. No secondary distribution without express permission.



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