Month-End Flood of Data Paints May 2020 as Anything But Merry

May 29, 2020

During May, roughly 2.69 new cases of Covid-19 were identified worldwide, and over 133,000 died from the disease. The U.S. share of the total 362,829 identified deaths related to the pandemic remains at 28.5% even though the United States has just 4.3% of the world’s population.

The racial protests in Minneapolis have spread to other parts of the United States.

Tensions continue to mount between the Trump White House on the one hand and China, African Americans, state governors, and social media on the other. Anything that distracts attention from America’s death toll is fair game.

Share prices are ending the month on a down-note, dropping 1.6% in Australia, 0.7% in Hong Kong and 0.2% in Japan. Markets are down moderately in Europe and the United States.

Among commodity prices, oil has dropped 2.1%, while gold is 1.0% firmer.

Ten-year German, U.S., and British sovereign debt yields are down 5, 3, and 3 basis points today, and the dollar is down too, with losses of 0.8% against the euro, 0.5% against the peso, 0.4% relative to the yen, 0.3% versus the Australian dollar and sterling, 0.2% relative to the loonie, and 0.1% against the yuan.

There have been many historically bad data releases on this final business day of May.

Real GDP contracted last quarter by 5.3% (not annualized) in France and Italy, 7.0% in Iceland, 3.3% in Belgium, 2.6% in Austria 3.8% in Portugal, 1.3% in Cyprus, 2.1% in Denmark, 4.1% in Greece, 0.4% in both Poland and Hungary, and 0.9% in Finland. Canadian GDP slumped 2.1%, which on an annualized rate equates to 8.2% versus the U.S. contraction rate of 5.0%. Turkish GDP went up 0.6% last quarter, but the on-year pace dropped 1.5 percentage points to 4.5% there. Sweden’s 0.1% uptick of GDP last quarter surprised analysts looking for a half-percent decline, but on-year growth in that country noted for not imposing social distancing was only 0.4%.

Japanese industrial production plunged 9.1% on month in April and by 14.4% compared to a year earlier, earning a downgraded trend designation by officials from the previous label of “weakening” to a new classification of “declining rapidly.” Japanese retail sales were 13.7% lower than in April 2019, including a 22.1% on-year plunge in large-store sales. Japanese consumer confidence remained heavily depressed at a May reading of 24.0 after a record low of 21.6 in April and a score of 39.0 at the end of 2019. Huge on-year April declines in housing starts and construction orders of 14.2% were reported. Finally, Japan’s monthly labor market report revealed a 1.2% on-year decline in employment and a further slide in the job offers-to-seekers ratio to 1.32 in April from 1.57 at end-2019, but there was also an unexpected 0.1 percentage point downtick in unemployment to 2.6%. Finally, total and core CPI inflation in Tokyo during May printed at 0.4% and 0.2%, respectively.

Over the twelve months through April, South Korean industrial production and retail sales fell 4.5% and 2.2%, respectively.

German retail sales volume fell on month by 4.0% in March and by a further 5.3% in April, its greatest month-to-month slide in 159 months. Dutch retail sales sank 1.5% on month in April, its first drop of any magnitude in 67 months. Irish retail sales in March plunged by a record 35.4% in March and were 43.3% lower than a year earlier, while Greek retail sales that month dropped 2.0% on month and 3.1% on year. French consumer spending sank 20.2% last month.

Switzerland’s KOF-compiled leaders index, which was as high as 101.7 in February, set another record low, falling 6.5 index points further to 53.2.

Canadian industrial production sank 5.2% on month in March and by 6.1% relative to a year earlier.

U.S. personal spending in April slumped 13.6% on month and 17.3% on year despite a 10.5% monthly advance in income that reflected fiscal stimulus. The savings rate soared to an incredible 33.0%, but the total PCE and core PCE price deflators fell 0.5% and 0.4% on month. On-year changes in those two inflation measures, which the Fed monitors very closely, fell sharply too to 0.5% and 1.0%. The U.S. Senate leadership is openly warning about inflationary fallout from fiscal stimulus but should instead fear Japanese-like deflation.

Consumer prices in Euroland slid 0.1% on month and to a year-on-year 0.1% in May versus January’s 12-month increase of 1.4%. Core inflation remained steady at 0.9% but down from 1.3% last December.

Price data reported for other economies showed a 45-year low in French CPI inflation of just 0.2% in May. Italian consumer prices slipped 0.1% both on month and on year in May. Producer price deflation in Singapore swelled 6.2 percentage points to -15.5% in April. Filipino producer prices fell 0.6% on month and 3.9% compared to a year earlier in April. A 13.9% on-year drop in Greek producer prices in April was the most negative in the 24-year history of that data series. Polish CPI inflation (-0.7%)  in May was its most negative (-0.7%) in 70 months. Austrian producer prices were 2.4% lower in April than a year earlier, and Canadian producer prices that month were down 2.3% from their level in March and 6.0% lower than a year before. Energy was the main disinflationary source in Canada, but even excluding that item left PPI inflation at a mere 0.5% and 0.3 percentage points less than in the prior month.

The U.S. early indication of April trade flows shows month-on-month declines of 29.2% in exports and 14.3% in imports.

It’s been quiet on the central banking front, but the monthly money and credit data release for the euro area shows accelerating trends related to recent quantitative stimulus by the ECB.

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





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