Slew of Data Released on Final Day of August
August 31, 2023
U.S. personal income and consumption expenditure growth in July defied expectations in opposite ways. Personal spending climbed 0.8% on month (0.6% adjusted for inflation), while income growth slowed to 0.2%. Downtrends in total and core U.S. inflation according to the PCE price deflator partly reversed with the former increased 0.3 percentage points to 3.3% and the latter ticking up to 4.2% from 4.1%. Other U.S. releases included an 11-month high in the Chicago regional purchasing managers index of 48.7 in August after 42.8 the month before. Also, new jobless insurance claims last week unexpectedly dropped to a 4-week low of 228k. The Fed needs to see the labor market loosen up much more than it has.
Japanese data releases today featured an unexpectedly big 2.0% drop in industrial production, prompting METI officials to characterize recent results as “fluctuating indecisively.” Retail sales jumped 2.1% in July, recording the largest on-year advance (6.8%) in four months. Housing starts (-6.7%) posted their fifth on-year decline in six months, whereas construction orders (+8.7%) increased year-on-year for the fifth time in the last six months.
In the euro area,
- The jobless rate remained steady at a record low of 6.4% but just 0.3 percentage points below their year-earlier level.
- Year-on-year consumer price inflation in the bloc during August unexpectedly flattened at 5.3% because of a 3.2% monthly jump in energy costs. Service sector price inflation of 5.5% is too high, and overall core CPI of 5.3% was a full percentage point higher than in August 2022.
- Published minutes from the ECB Governing Council meeting in late July, when interest rates were hiked by 25 minutes, signal that yet another increase is possible at September’s meeting, but that such a move is not a foregone conclusion. Several members are eager to learn the results of the quarterly update in staffing forecasts, as well as forthcoming data, before committing to a final decision.
A 0.5% quarterly rise in French GDP during the second quarter was confirmed. In year-on-year terms, growth of 1.0% was down from 1.9% in the prior four-quarter period ending in 2Q 2022. Belgian GDP growth of 0.9% between the second quarters of 2022 and 2023 was the slowest in nine quarters. Year-on-year Portuguese GDP growth was the slowest in nine quarters as well.
German retail sales fell 0.8% on month and 2.2% on year in July. Those results were weaker than analysts were anticipating.
South African producer price inflation of 2.7% in July represents a 33-month low and was down from 4.8% in June and a record high of 18.0% in July 2022.
Sri Lankan CPI inflation of 4.0% in August was the lowest in 28 months and down from a record high of 67.4% in September 2022.
On-year GDP growth in India of 7.8% last quarter was close to expectations, up from 6.1% in the first quarter but down from 13.5% in the second quarter of 2022.
Real GDP in Turkey followed a 0.1% dip in the first quarter with a 3.5% quarterly resurgence in the second quarter, which was the fastest jump in 7 quarters. GDP was 3.8% higher than a year earlier.
South Korean industrial production fell 2.8% on month and 8.0% on year in July.
The Canadian C$ 6.637 billion current account deficit in the second quarter contrasted sharply with a surplus of C$ 4.832 billion in the second quarter of 2022, reflecting a swing of the merchandise trade balance into the red for the first time in two years.
The dollar rose overnight by 0.6% against the euro, 0.5% relative to the Swiss franc, and 0.4% relative to sterling.
Equity markets this Thursday have been mixed, with a 0.9% rise in Japan and a 0.7% improvement so far in Germany but lower closes in China, Taiwan, Hong Kong, India and South Korea. U.S. share prices are somewhat firmer.
Ten-year sovereign debt yields dropped eight basis points in Germany, France and Italy, seven basis points in the U.K. and 3 bps so far in the United States.
The price of WTI oil rose 1.6%, while prices for Bitcoin and gold fell overnight by 0.6% and 0.2%.
Copyright 2023, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Euroland CPI and unemployment, German retail sales, Japanese industrial production and retail sales, U.S. personal income and spending
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