Much New Data for Investors to Digest

August 14, 2020

Today’s been one of those Friday’s with a significant body of economic data releases both from both a quantitative and qualitative standpoint.

Prior to the U.S. contingent of releases, the dollar overnight had dropped 0.4% against sterling and 0.3% relative to sterling but risen by 0.2% against the Canadian and Australian dollars and 0.1% vis-a-vis the kiwi, yuan and peso. The dollar was unchanged against the euro and Swiss franc.

Share prices had climbed 1.2% in China, 0.6% in Australia, and 0.2% in Hong Kong but were down 1.8% in France, 1.6% in Spain and Great Britain, 1.4% in Italy, 1.2% in South Korea, 1.1% in India, 1.0% in Germany and Switzerland.

Shortly after the reports that U.S. industrial production and retail sales had risen 3.0% and 1.2% in July and news that U.S. productivity had shot up by a much larger-than-forecast 7.3% in the second quarter, U.S. share prices opened lower. The rise in retail sales was less than forecast, and industrial production was still 8.3% south of its level in February. Unit labor costs were 12.2% greater in 2Q than 1Q and 5.7% above a year earlier.

Gold had traded 0.6% softer, and the price of WTI oil had edged up 0.1%. Ten-year sovereign debt yields had risen a basis point in Japan and the U.K. and dipped that same amount in the United States.

There were many second-quarter GDP reports particularly from members of the European Union, and the gestalt of these releases is the global dimension of the devastation to economic activity caused by the Covid-19 pandemic. Euroland real GDP tumbled 12.1% on quarter — 2.6 percentage points more than the drop of U.S. GDP — and was 15.0% weaker than a year earlier. GDP in Germany, France, Italy, Spain, Belgium, Austria, Cyprus, and Portugal recorded quarterly declines that exceeded 10.0%, not annualized. Dutch and Finnish GDP fell 8.5% and 3.2% but still recorded on-year drops of 9.0% and 5.2%.

Among Eastern European economies, GDP last quarter dropped 8.4% in the Czech Republic, 8.9% in Poland, 14.5% in Hungary and 12.3% in Romania. InĀ  the Nordic area of Europe, Swedish GDP fell 8.6% on quarter and 8.3% on year, while Danish GDP dropped 7.4% from 1Q and 10.7% compared to a year earlier.

In Asia, Hong Kong GDP dipped only 0.1% on quarter. However, that was the fifth consecutive quarterly decline and left GDP 9.0% below its year-earlier level. Malaysian GDP plunged 16.5% in 2Q and by 17.1% from a year earlier. A 0.58% year-on-year drop in Taiwanese GDP was slight by comparison but nonetheless the greatest decline since the third quarter of 2009 there.

China was not among the countries reporting GDP but did report a wide array of July monthly figures.

  • Industrial production rose 4.8% on year but still fell 0.4% in January-July compared to a year earlier. Hit early by the pandemic, China began 2020 with a 13.5% on-year IP drop in January-February.
  • Retail sales still haven’t crossed into the black. Sales in July were 1.1% lower a year earlier and posted a 10.4% on-year slide in the first seven months of this year.
  • Fixed asset business investment during January-July was 1.6% lower than a year earlier, which was an improvement on the 3.1% drop posted in the first half of 2020.
  • Chinese unemployment failed to fall further in July from June’s 5.7% reading and was just a half-percentage point under February’s high.
  • Property prices rose 4.8% between July 2019 and last month.

Service sector activity captured in Japan’s monthly tertiary index posted the first increase in June since January, but although the increase was a robust 7.9%, the July level was still 8.6% below a year earlier. The index also recorded a 9.8% quarter-on-quarter drop.

New Zealand’s purchasing managers index in manufacturing rose 2.5 points in July to 58.8, indicating the fastest advance since early 2017.

Lebanon’s purchasing managers index was below the 50 breakeven level for a fifth straight month in July but at 44.9 the highest in that streak. Alas the recent Beirut explosion suggests a bit drop come August.

French consumer prices rose 0.7% on month and 0.8% on year in July.

The Swiss combined PPI/import price index rose 0.1% in July but fell 3.3% on year.

Indian wholesale prices were lower than a year earlier for a fourth straight time i n July, the 0.58% drop was the smallest slide in that streak. Fuel prices had slumped 19.9% on year in May but just 9.8% in July.

Euroland’s unadjusted trade balance in the first half of 2020 was a surplus of EUR 85.9 billion, down from EUR 95.8 billion in the first half of 2019 with exports and imports falling by 12.7% and 12.5%. The seasonally adjusted June surplus doubled to EUR 17.1 billion, as monthly export growth of 11.2% far exceeded the 5.6% rebound of imports.

Turkish retail sales and industrial production climbed by 16.5% and 17.6% on month in June but were up only 0.1% and down 0.8%, respectively, compared to a year earlier. The Turkish lira slid to a record low against the dollar earlier today.

Reserve Bank of Australia Governor Lowe said he would welcome some Aussie dollar depreciation but also indicated the central bank is not inclined to conduct foreign exchange intervention as such likely would prove ineffective.

Canadian manufacturing sales and orders recovered 20.7% and 23.6% last month.

The U. Michigan/Reuters preliminary estimate of U.S. consumer sentiment in August showed such to be still quite depressed at 72.8 after 72.5 in July and 101.0 last February.

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


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