Category Archives: Economy
Euro Services and Factory Output Data Come in Better Than Expected
“A euro-area services and factory output gauge increased more than economists forecast in May, adding to signs the currency bloc is starting to emerge from its record-long recession.
A composite index based on a survey of purchasing managers in both industries rose to 47.7 from 46.9 in April, London-based Markit Economics said today. That exceeded the median estimate of 47.2 in a Bloomberg News survey of 27 economists. A reading below 50 indicates contraction.
While the euro-zone manufacturing index rose to a three-month high of 47.8 in May, Chinese factory output contracted for the first time in seven months, signaling the country’s economic growth is losing steam for a second quarter.
“We see the euro zone being out of recession in the third quarter,” said Christian Schulz, senior European economist at Berenberg Bank in London. “We’ve seen improving confidence since the ECB provided a safety net, and the risk of countries having to leave the euro has decreased. Also austerity is fading.”
The euro extended gains after the data were released, trading at $1.2903 at 10:56 a.m. in Brussels, up 0.4 percent on the day. The Stoxx Europe 600 Index was down 2.1 percent to 303.97.
Rate Cut…”
Signs of a Better Economy for Main Street Arise
“Americans are on the move again.
Thanks to the slowly brightening employment picture, along with the uptick in the housing market, more and more people are packing up and relocating. And the pace is likely to pick up this summer, the peak season for moving, according to industry professionals.
It’s a far cry from just a few years ago.
“Two years ago, it seemed like everything was falling off the face of the Earth,” said Randy Shacka, president of Two Men and a Truck, a franchise moving company.” But monthly payroll growth averaging 208,000 is turning that around—and spurring job-related moves.
Even though overall moving activity is still below where it was in 2009-2010, the number of people moving for a new job or transfer is on the rise. Moves for those reasons totaled 3.5 million in 2011-2012, up from 2.8 million the prior year and the highest since 2006-2007, according to Census Bureau data. And the number of people moving because they had lost a job or were looking for work declined.
The recovering housing market is also giving people the flexibility to move by making it easier for people to sell their homes. The National Association of Realtors’ chief economist says that with relatively few houses on the market, double-digit gains in housing prices are possible in 2013. And that, in turn, is spurring construction—making moving easier….”
Inflation Falls More Than Expected in the U.K.
“U.K. inflation slowed more than economists forecast in April to a seven-month low and producer prices rose the least since 2009 as fuel costs fell.
Consumer prices rose 2.4 percent from a year earlier, down from 2.8 percent in March, theOffice for National Statistics said in London today. The median forecast of 35 economists in a Bloomberg News survey was 2.6 percent. Core inflation also cooled, while factory-gate prices increased at the slowest annual pace in 3 1/2 years. The pound weakened….”
Thailand’s GDP Misses Estimates, Easing Expected
“Thailand’s government lowered its full-year growth forecast after the economy expanded less than analysts estimated last quarter, boosting the case for the central bank to cut interest rates.
Gross domestic product increased 5.3 percent in the three months through March from a year earlier, after expanding a revised 19.1 percent in the previous quarter, the National Economic and Social Development Board said in Bangkok today. The median of 13 estimates in a Bloomberg News survey was 6 percent.
The growth slowdown may give the Bank of Thailand scope to join a global wave of monetary easing, after resisting pressure from the government in recent months to lower borrowing costs and curb inflows that last month drove the baht to a 16-year high. Finance Minister Kittiratt Na-Ranong, who has led calls for lower rates, has said the central bank must cut by more than a quarter of a percentage point or implement capital controls.
“The recovery in external demand that will be positive for Thai exports is not happening,” and weaker growth justifies an interest-rate cut, said Enrico Tanuwidjaja, a Singapore-based economist at Royal Bank of Scotland Group Plc. “The baht’s strength is an additional factor to motivate a rate cut.”….”
Old Man Buffett’s Favorite Indicator Is Still Weak
“This week’s rail traffic reading showed modest improvement
over recent weeks, but the longer-term trend remains negative. Intermodal traffic was up 3.9% this week which was an improvement over last week’s reading of 2.8%. The data, however, continues to soften on a rolling 3 month basis with the latest reading coming in at 3%. That’s the lowest level since January. The good news is we’re not seeing the type of consistently negative readings that tend to precede a recession. The bad news is that the growth is tapering.
Here’s more via AAR….”
Initial Claims, CPI, & Housing Starts
Initial CLaims: Prior 323k, Market Expects 330k, Actual 360k ,
CPI: Prior -0.2%, Market Expects -0.2%, Actual -0.4%, Core +1.7%
Housing Starts: Prior 1036k, Market Expects 97ok, Actual 853k ……down 16.5%, Building permits are up 14.3%
Japan’s Economy Expands the Most Since the Tsunami
“Japan’s economy expanded the most in a year last quarter as consumer spending and export gains outweighed the weakest business investment since the wake of the March 2011 earthquake and tsunami.
Gross domestic product rose an annualized 3.5 percent, a Cabinet Office release showed inTokyo. Private consumption, making up 60 percent of GDP, contributed 2.3 percentage points to the jump. The BOJ may upgrade its assessment of the economy after a May 22 policy meeting, according to people familiar with the central bank’s discussions.
Today’s report shows while consumers — aided by a stock-market surge — are responding to the reflation campaign mounted by Prime Minister Shinzo Abe and Bank of Japan chief Haruhiko Kuroda, companies remain cautious. That may change as the yen’s 21 percent slide against the dollar in the past six months spurs profits and Abe embarks on reducing regulations hampering the world’s third-biggest economy.
“Japan is clearly back from stagnation last year,” said Naoki Iizuka, an economist at Citigroup Inc. in Tokyo. “The key from here is whether Abe can unveil a strong growth strategy. If he succeeds, that will boost business investment to support growth.”
Abe plans next month to unveil his so-called third arrow of structural reform, following the first two arrows of monetary and fiscal stimulus.
Exceeding Estimates…”
PPI Drops the Most in Three Years, NY Manufacturing Falls
“WASHINGTON (Reuters) - Producer prices recorded their largest drop in three years in April as gasoline and food costs tumbled, pointing to weak inflation pressures that should give the Federal Reserve latitude to keep monetary policy very accommodative.
The Labor Department said on Wednesday its seasonally adjusted producer price index fell 0.7 percent last month, the biggest decline since February 2010. Wholesale prices had dropped 0.6 percent in March.
A Reuters survey of economists had forecast prices received by the nation’s farms, factories and refineries dropping 0.6 percent last month.
In the 12 months through April, wholesale prices were up only 0.6 percent, the smallest increase since July last year. Prices had increased 1.1 percent in March.
Underscoring the tame inflation environment, wholesale prices excluding volatile food and energy costs nudged up 0.1 percent, the smallest increase since November. The so-called core PPI had risen 0.2 percent in each of the previous four months.
In the 12 months through April, core PPI advanced 1.7 percent after rising by the same margin in March.
The report was the latest suggestion that disinflation was starting to creep in against the backdrop of lackluster domestic and global demand….”
“……New York Manufacturing Down
Activity in New York state’s manufacturing sector unexpectedly contracted in May, falling to the lowest level in four months as new orders and employment pulled back, data from the New York Federal Reserve showed on Wednesday.
The New York Fed’s “Empire State” general business conditions index fell to minus 1.43 in May from 3.05 in April, thwarting economists’ expectations for an increase to 4.
It was the first reading below zero since January, which indicates contraction for the sector….”
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France Falls Into a Third Recession In the Last Four Years
“The French economy fell into its third recession in four years, increasing pressure on PresidentFrancois Hollande to adopt policies to revive growth.
Gross domestic product shrank 0.2 percent in the three months through March, following a revised 0.2 percent contraction in the previous quarter, national statistics office Insee said today. Economists expected a 0.1 percent drop, according to the median of 25 forecasts gathered byBloomberg News.
Celebrating his first anniversary in office today, Hollande is struggling to reduce the number of jobseekers from a record 3.22 million and lift his popularity rating from a record low. With the wider euro-area economy set to shrink for a second year in 2013, Hollande has been pushing to slow the pace of deficit reduction in the 17-nation bloc in favor of more pro-growth policies.
“The most important thing now is to create growth and employment,” Finance Minister Pierre Moscovici said this week in Brussels. “We must absolutely fight to have stronger growth in 2014 and to have the start of that growth in 2013.”
Euro-area GDP will drop 0.4 percent this year after a 0.6 percent decline in 2012, according to European Commission forecasts released earlier this month. First-quarter figures for the region will be published later today.
The commission said May 3 that it would give France another two years to reduce its deficit to less than 3 percent of GDP, though it said the nation’s lack of competitiveness is as much a part of the problem as the lack of growth in the region.
Hollande needs to press ahead with promises to revamp the nation’s labor law and pension system, the Commission said….”
Import Prices Drop 0.5%, Export Prices Drop 0.7%
story developing
This Week Will Be Packed With Economic Data, Here is What to Look For
“Last week was unusually quiet for the economy, even as the stock market rallied to an all-time high.
This week’s schedule, however, is loaded with April and May economic data. By Friday, we should have a pretty good sense of whether or not the economy decelerated going into the second quarter.
For the most part, economists are expecting a month-over-month slowdown.
Top Stories…”
U.S. Retail Sales Rise More Than Expectations
“This story is developing. Please check back for further updates.
Economists in a Reuters survey expect a 0.3 percent decrease compared with a 0.4 percent decrease in March. Excluding automobiles, sales are expected to fall 0.1 percent versus a 0.4 percent drop in March.”
Old Man Buffett’s Favorite Indicators Stabilizes in the Low Single Digit Range
“Rail traffic trends have been undoubtedly weak in recent weeks as we’ve seen double digit year over year growth slide into negative territory. This brought our 12 week moving average from a high of 6.75% in March to the low single digits.
The latest intermodal traffic data from AAR showed 2.8% growth which is an improvement from last week’s 1.6% reading, but still trending lower on a monthly basis. We’re now at a 3 month low in the moving average at 3.13%. So there are some small signs of stability, but the overall trend is still down….”
Australia Forecasts Below Trend Growth, RBA Cuts Inflation Outlook
“The Reserve Bank of Australia cut its inflation outlook and reiterated its forecast for “below trend” growth this year, driven by an elevated currency, a crest in resource investment and fiscal tightening.
“The outlook for non-mining business investment remains relatively weak over the next few months,” the RBA said in its monetary policy statement in Sydney today. “The approaching peak in resource investment, the high level of the Australian dollar and ongoing fiscal consolidation are all likely to weigh on growth over the next year or so, while at the same time the low level of interest rates is helping to support demand.” …”
Rate Cuts Help India’s Factory Output to Increase
“India’s industrial output in March expanded at the fastest pace in five months after the central bank eased interest rates to revive economic growth.
Production (INPIINDY) at factories, utilities and mines climbed 2.5 percent from a year earlier after a revised 0.5 percent gain in February, the Central Statistical Office said in a statement in New Delhi today. The median of 26 estimates in a Bloomberg News survey was for a 2.4 percent gain.
The Reserve Bank of India has cut interest rates three times in 2013 to help revive an economy that expanded at the weakest pace in a decade last year, extending the only reduction in borrowing costs this year in the major emerging nations of the BRIC group that include China, Russia and Brazil. Moderating investment, an extended fight against inflation and a drop in exports have hurt growth in Asia’s No. 3 economy….”
Wholesale Sales Plunge Most Since March 2009
“U.S. wholesale inventories rose in March, fueled by increased stocks of cars and machinery which have provided support for economic growth early in the year, but wholesale sales posted the biggest fall in four years.
The Commerce Department said on Thursday wholesale inventories rose 0.4 percent, just above the median forecast in a Reuters poll for a 0.3 percent gain….”
Industrial Production in the U.K. Rises More Than Expected
“U.K. industrial production rose more than economists forecast in March as cold weather boosted demand for electricity and gas.
Output increased 0.7 percent from February, when it gained 0.9 percent, the Office for National Statistics said today in London. The median forecast of 31 economists in a Bloomberg News survey was for a gain of 0.2 percent. Electricity and gas surged 2.4 percent, the most since October. The data also showed that production increased 0.2 percent in the first quarter, matching an estimate in last month’s gross domestic product report.
Britain’s economy grew 0.3 percent in the three months through March and surveys suggest that the recovery may have continued into this quarter. Bank of England policy makers meeting today will probably maintain their target for asset purchases at 375 billion pounds ($583 billion) as they weigh risks to the rebound from the contraction in the fourth quarter.
The data “suggest that the economic recovery gained some momentum towards the end of the first quarter,” said Samuel Tombs, an economist at Capital Economics Ltd. in London. Still, “we doubt that this strong growth will be maintained. With the euro zone still deep in recession, any recovery in the export-dependent industrial sector this year is likely to be limp at best.”
The pound advanced against the dollar and the euro. It rose 0.2 percent to $1.5559 as of 10:31 a.m. London time and was 0.3 percent stronger at 84.43 pence against the euro. The yield on the 10-year U.K. government bond was little changed at 1.77 percent.
Manufacturing Growth…”
CPI Stays Subdued in China
“China’s consumer inflation stayed subdued in April while the decline in factory-gate price declines deepened, adding to evidence of softer demand and giving the government room to raise utility fees.
The consumer price index (SHCOMP) rose 2.4 percent in April, the National Bureau of Statistics said today in Beijing, compared with a median forecast of 2.3 percent in a Bloomberg News survey. The producer price index fell 2.6 percent, after March’s 1.9 percent drop.
Inflation running below the government’s annual goal of 3.5 percent gives new Premier Li Keqiang leeway to loosen resource-fee controls that the World Bank says encourage pollution and limit incentives for new technologies. The producer-price deflation may reflect lower commodity prices and factory overcapacity…..”
The Euro Jumps as German Factory Orders Strengthen
“The euro strengthened against the dollar and yen after German factory orders unexpectedly increased in March, suggesting the region’s largest economy is starting to grow again.
The 17-nation currency rose against all except one of its 16 major peers as the German data damped speculation the European Central Bank will ease monetary policy further after President Mario Draghi said last week the ECB had an open mind about a negative deposit rate.Australia’s dollar fell to a two- month low against the greenback after the central bank cut interest rates to a record low. Sweden’s krona strengthened as industrial production (SWIPNSYY) exceeded economists’ forecasts.
“The German data was far better than expected,” said Jane Foley, senior foreign-exchange strategist at Rabobank International in London. “Today’s data suggests that we are another step away from them cutting the discount rate to negative territory.”
The euro gained 0.4 percent to $1.3123 as of 7:29 a.m. New York time after climbing to $1.3243 on May 1, the highest since Feb. 25. The single currency advanced 0.3 percent to 130.21 yen after dropping as much as 0.5 percent. The yen was little changed at 99.22 per dollar.
The euro is likely to trade between $1.30 and $1.32 until “data gives us strong direction one way or another,” Rabobank’s Foley said.
German factory orders, adjusted for seasonal swings and inflation, increased 2.2 percent from February, the Economy Ministry in Berlin said. The median estimate in a Bloomberg News survey of economists was for a 0.5 percent decline.
ECB ‘Ready’….”
Inflation Ticks Higher in Russia
“Russian inflation accelerated in April after slowing a month earlier, strengthening arguments to delay easing monetary policy.
Consumer prices rose 7.2 percent from a year earlier after a 7 percent advance in March, the Federal Statistics Service in Moscow said by e-mail today. That matches the median estimate of 24 economists in a Bloomberg survey. Prices increased 0.5 percent in the month, also in line with economist forecasts.
Policy makers led by outgoing central bank Chairman Sergey Ignatiev are waiting to see a sustained slowdown in inflation before cutting their main interest rates. Restraining inflation remains a priority and the government won’t compromise efforts to subdue price growth with economic stimulus, First Deputy Prime Minister Igor Shuvalov said April 18 in Moscow. The economy grew 2.1 percent in the last three months of 2012 from a year earlier, the slowest rate since a 2009 contraction….”
