Better-than-Expected Batch of Chinese Data Lifts Renminbi
January 17, 2020
The dollar fell 0.3% against China’s renminbi but advanced 0.2% versus the euro, kiwi and Swiss franc and by 0.1% relative to the loonie. The dollar remained steady against the yen, sterling, and Australian dollar.
The recent upturn in share prices was extended in the Pacific Basin and Europe, with gains of 0.6% in New Zealand, Hong Kong, and Germany, 0.5% in Japan, 0.7% in Italy, 0.9% in France, 1.0% in the U.K. and Switzerland and 1.2% in Spain.
Ten-year British gilt and Japanese JGB yields dipped 2 and 1 basis points, but the 10-year U.S. Treasury yield edged a basis point higher. Among commodity prices, oil and gold climbed 0.4% and 0.5%.
Chinese real GDP expanded 1.5% last quarter, a tad above expectations, and 4Q-over-4Q growth stayed at the third quarter’s 6.0%, which was its lowest pace since the first quarter of 1992. Calendar year average growth was 6.1%, the ninth single-digit result in a row and down from 6.6% in 2018, 6.8% in 2017, 6.7% in 2016, 6.9% in 2015, 7.3% in 2014, 7.8% in 2013, 7.9% in 2012, 9.6% in 2011 and 10.6% in 2010.
There were more Chinese data releases. Between December 2018 and December 2019, growth in industrial production of 6.9% and retail sales of 8.0% also beat analyst expectations. Comparing 2019 to 2018 annual averages, industrial production climbed 5.7% versus 5.0% in the prior year, and retail sales rose 8.0%, down from a 9.0% increase in 2018. Fixed asset investment advanced 5.4% last year, down from 5.9% in 2018. The December unemployment rate was 5.2%. Such ranged between 5.0% and 5.2% over the final three quarters of 2019.
Euroland consumer price inflation was confirmed at a 1.3% on-year rate in December, most since June but 0.2 percentage points lower than in December 2018. Core CPI inflation held at November’s 1.3% pace, and the on-year increase of the energy component swung to +0.2% last month from -3.2% in November.
Construction output in the euro area rebounded 0.7% in November from a 0.5% drop in October. This lifted its 12-month change to +1.4% from +0.9% in October and -0.3% in September. Before weakness set in, construction output in the first quarter of last year had been 4.7% greater than a year earlier.
Euroland’s seasonally adjusted current account surplus widened to EUR 33.9 billion from EUR 32.4 billion in October and a monthly average of EUR 33.6 billion in the third quarter. Over the last 12 reported months, the surplus has averaged EUR 29.2 billion, equal to 3.0% of GDP.
British retail sales volume contracted 0.6% last month, shocking analysts that on average were anticipating an increase marginally above 0.5%. Sales failed to rise in each of the final five months of last year and dropped 1.0% in 4Q.
Switzerland’s combined PPI/import price index edged 0.1% higher on month in December and recorded the smallest 12-month decline (1.7%) in five months. But the full calendar year change swung from +2.5% in 2018 to -1.4% in 2019. Domestic producer prices sank 1.0% between December 2018 and last month, while import prices dropped 3.2%.
Italian CPI inflation of 0.5% last month was at a 6-month high. Italy’s current account surplus widened from EUR 47.8 billion in the twelve months through November 2018 to EUR 52.3 billion in the ensuing 12-month period.
New Zealand’s manufacturing purchasing managers index returned to contractionary territory in December with a sub-50 reading of 49.3. A string of sub-50 scores had been interrupted by readings of 52.6 in October and 51.4 in November.
Japan’s tertiary index of service sector activity recovered 1.3% in November after a tax hike-related 5.2% plunge in October. November’s tertiary index was 1.4% lower than its year-earlier level versus a 2.1% rise in the third quarter and on-year growth of 0.9% in the first half.
The Bank of Korea’s base rate was left unchanged as expected at 1.25% after the first policy review there of 2020. There were two 25-basis point reductions in 2019 made in July and October. A released statement observes that construction and exports are still declining and projects 2020 GDP growth to be in the low 2% range along with CPI inflation that will only reach 1.0%.
Several U.S. data releases are scheduled today: industrial production, capacity usage, housing starts, building permits, the JOLTS index, and the U. Michigan index of consumer sentiment.
Copyright 2020, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Bank of Korea, British retail sales, Chinese economic data, Euroland CPI and current account