US Q4 prelim GDP revised down to 2.2%

The prelim Q4 GDP grew 2.2%, revised down from the previous 2.6%.

The official report can be found here while Bloomberg has a article that is easier to understand.

German prelim CPI at 0.9%

The inflation rate in Germany measured by the consumer price index (CPI) is expected to rise by 0.1% in February 2015. Prices are expected to increase by 0.9% in January.

The inflation press release can be obtained here.

ANZ up

The ANZ business confidence in New Zealand gained 4 points to 34.4, compared to last month`s 30.4.

The business outlook report can be found here

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US CPI a mixed bag, unemployment claims worsen this week

Core consumer price inflation (CPI) grew by 0.2%, double of the estimated growth. This is a solid improvement after the prior period`s contraction of 0.3%.

CPI though missed estimates slightly by slowing down by 0.7%. Economists were predicting a deceleration of  0.6%, worse than last month`s contraction of 0.4%.

The full inflation report can be found here.

The weekly unemployment claims worsen to 313 thousand this week, up from last week`s 282 thousand. The report can be obtained here.

UK`s second estimate GDP remained at 0.5%

The second estimate of UK`s GDP was unchanged at 0.5%.

The GDP statement can be found here.

Australia`s private capital expenditure fell by 2.2%

Private capital expenditure in December tumbled by 2.2%. It was estimated for the expenditure to only drop by 1.6%.

The report can be obtained here.

NZ`s posted a surplus led by low dairy prices

New Zealand posted a trade surplus in January of $ 56 million, beating the estimated deficit of $ 162 million. However, total exports were down by 9% compared to January 2014. Dairy exports drove the fall although quantity wise, dairy rose by 2.9%.

The full report can be found here.

ECB`s annual report

Mario Draghi`s speech at the European Parliament regarding the ECB`s annual report can be found here.

US new home sales beat forecasts

New home sales in January recorded 481 thousand purchases, more than the estimated 471 thousand. This is slightly lower than December`s 482 thousand new sales.

Bloomberg has a write up about this.

Janet Yellen`s testimony continues

Her report to the congress can be found here.

BoE`s one bank agenda

The Bank of England Governor Mark Carner spoke about the central bank`s one bank agenda, an ambitious plan to transform the way research is done.

The full speech can be found here.

Manufacturing outputs up in China

Manufacturing outputs and new orders increased in February. The HSBC flash manufacturing PMI stood at 50.1, a four month high and beating the prior period`s 49.7 and estimated 49.6.

The full report can be found here.

RBNZ annual report

In the morning, the Reserve Bank of New Zealand (RBNZ) governor testified before the parliament select committee regarding the central bank`s annual report. He also stated that rents in Auckland are increasing.

Summing up Tuesday`s data

Tuesday started pretty slow with the UK inflation hearing coming out only at 6.00 pm. Bank of England Governor Mark Carney has told parliament that the inflation level will hit 2% in "reasonable time". It`s still a pretty vague time frame in my opinion and with the recent data, action is necessary for the inflation rate to hit the target.

In terms of forex movements, the pound gained against the Euro to a 7 year high.

The European Central Bank President Mario Draghi unveiled the new 20 euro note in Frankfurt.

Consumer confidence fell in the US to 96.4, missing estimates of 99.6 and the previous period`s 103.8.

Later, the FED Chair, Janet Yellen testified. Clarence Lim, a trading associate mentioned that nothing was new and it was dovish.

Key indicators this week (Week 9)

Monday
- German Ifo business climate

Tuesday
- UK inflation report hearing
- Eurogroup meeting
- CB consumer confidence
- FED Chair Janet Yellen testifies

Wednesday
- RBNZ governor speaks
- HSBC flash manufacturing PMI
- BoE Governor Carney speaks
- FED Chair Janet Yellen testifies
- US new home sales

Thursday
- ECB President Draghi speaks
- New Zealand trade balance
- UK second estimate GDP
- Euro targeted LTRO
- US CPI
- US core CPI
- US weekly unemployment claims

Friday
- ANZ business confidence
- German prelim CPI
- US prelim GDP

Summary of week 8

Wednesday 
Labour conditions in the UK saw positive figures, with average earnings index and claimant counts beating estimates. Average earnings index increased by 2.1% versus the estimated 1.7% and previous period`s 1.8%. Claimant count change fell by 38.6 thousand versus the estimated 25.2 thousand and previous period`s 35.8 thousand. The MPC votes remained at 0-0-9.

In the US, building permits fell to 1.05 million versus the estimated 1.08 million and prior period`s 1.06 million. PPI too missed forecasts at -0.8% versus the estimated -0.4% and last month`s -0.2%.


Thursday
US FOMC minutes were out,

PPI in New Zealand dropped to -0.4% versus the estimated 0.2% but fairing better than last month`s -1.5% decline.

In Euro, the ECB released its monetary policy meeting accounts.

Unemployment claims improved in the US to 283 thousand, beating the estimated 293 thousand and last week`s 304 thousand. The Philly FED manufacturing index missed forecasts by a huge margin at 5.2 versus the estimated 8.8 and previous period`s 6.3


Friday
French flash manufacturing PMI declined again to 47.7 the estimated 49.7 and last month`s 49.2. Germany too missed estimated at 50.9 versus the forecasted 51.8 and last month`s 50.9.

Retail sales in the UK fell to -0.3%, versus the estimated -0.1% and prior period`s 0.2%.

BoJ monetary policy statement

The Bank of Japan will continue with its current monetary policies. The statement out today did not reflect on any new changes.

Consumer price index (CPI) is again said to be slow for the time being due to the low oil prices.

The statement can be found here.

SNB speech

The speech of the Swiss National Bank Chair can be found here.

GDT index up by 10.6%

The GDT price index accelerated to 10.6% compared to a 9.4% growth recorded a fortnight ago.

ZEW economic sentiment gained nearly 5 points

After last month`s meager 48.4 points, the ZEW economic sentiment in Germany recorded an improvement of 4.6 points to 53.0. This falls short of the forecasted 55.4.

The full report can be found here.

UK CPI meets estimates but still low

The UK consumer price index (CPI) recorded a growth of 0.3% in January, while meeting estimates is down from the 0.5% increase recorded in December. The fall in fuel and food prices have been blamed for this slowdown.

12 month CPI rate for the last 10 years:

The full CPI report can be found here.

RBA: Rate cut by 25 basis points

It was not surprising that the Reserve Bank of Austalia (RBA) cut bank rates by 25 basis points in its monetary policy statement today. On Friday, RBA governor Glenn Stevens touched about the effects of a rate cut. Why would he mention about it in his speech if a rate cut was about to take place?

In terms of financial markets, while the ECB`s monthly purchases are less than the Federal Reserve`s (FED) cap of $ 85 billion, on an annualized basis the ECB`s purchase would be equivalent to around 7.5% of the euro area`s annual GPD. In comparison, the purchase relative to GDP by the FED is only 6% of the US GDP while the Bank of Japan has a rather high 16% of the Japanese GDP. The Australian dollar has depreciated around 9% against the US dollar since the December meeting and was around 4% below its early 2014 levels.

Back to the rate cut, the board decided to lower the cash rate by 25 basis points to 2.25%. The concept of interest rate parity would dictate that the Australian dollar would set to drop further against the US dollar, however this was not the case yesterday.

The whole monetary policy statement has to be read and thoroughly analyzed to predict which direction a currency would go. This time around, the RBA implied that a rate cut would help improve the GDP.

The full text can be found here.

Japan out of recession but prelim GDP missed estimates

The preliminary GDP in Japan saw a 0.6% growth in the forth quarter of 2014, a positive territory since the third quarter`s contraction of -0.5%. Economists however were expecting a 0.9% growth. Overall, this meant that the annualised GDP grew at a pace of 2.2% in 2014.

In addition, today`s positive figure brings Japan out of a recession.

New Zealand retail sales up driven by motor vehicles

Retail spending in New Zealand accelerated to 1.7% in the December quarter, mainly due to the expansion in motor vehicle industry. This is a slight improvement from the 1.6% growth recorded in the September quarter and the last time retail sales rose by 1.7% was in the June 2012 quarter.

Twelve of the 15 retail industries had higher volume in sales.

Head over to Statistics New Zealand for the full report.

Key indicators this week (Week 8)

Monday 
- New Zealand retail sales
- Japan`s preliminary GDP
- Eurogroup meeting

Tuesday 
- Australian monetary policy meeting minutes
- UK CPI
- German ZEW economic sentiment
- GDT price index

Wednesday 
- Swiss National Bank Chairman speaks
- Japan`s monetary policy statement
- Bank of Japan`s press conference
- UK average earnings index
- UK claimant count change
- UK MPC official bank rate votes
- US building permits
- US PPI

Thursday 
- FOMC minutes
- US unemployment claims
- Philly Fed manufacturing index

Friday
- French flash manufacturing PMI
- German flash manufacturing PMI
- UK retail sales

UoM: Consumer sentiment down in February

The University of Michigan (UoM) preliminary survey showed that consumer sentiment dropped in February to 93.6. This was from an 11 year high of 98.1 in January.

The drop is largely attributed to the low oil prices which are now at a six year low.

Jobless claims increased in the US

The weekly unemployment claims was at 304 thousand, some 25 thousand more people filling for unemployment insurance compared to last week.

The report can be found here.

RBA speech

The Reserve Bank of Australia (RBA) governor Glenn Stevens spoke to the House of Representatives Standing Committee today. The speech can be found here .

The main highlight of it is that rate cuts will not affect the Australian economy.

Retail sales missed estimates

January was a disappointing month for retail traders as the retail sales data missed estimates. Core retail sales maintained at  -0.9% compared to the -0.4% forecasted while retail sales stood at -0.8% versus the estimated -0.4%. The only good news is that retail sales was a tiny improvement compared to the drop in December which was -0.9%.

Bloomberg has a write up regarding this area.

UK inflation at a 14 year low, BoE to maintain rates

The inflation level in the UK has fallen terribly to 0.5%, a distant number from the optimum 2.0% needed by the Bank of England (BoE). In addition, the inflation level is expected to drop to 0 due to the low oil prices. As expected, Governor Mark Carney and his monetary policy committee (MPC) members cannot raise rates.

Interestingly enough, Mark Carney wrote a letter to the Finance Minister, George Osborne explaining why the UK is not experiencing deflation.

The inflation report can be found here.

Bank rates remain at 0.5% and stock of purchase assets at  £375 billion.

Jobs data red in Australia, highest unemployment rate in 13 years

The Australian jobs data is seeing red. Unemployment rate climbed to 6.4%, the highest level in 13 years as reported by The Guardian. The employment change also fell to -12.2 thousand, a massive drop compared to the previous period`s creation of 42.3 thousand new jobs.

The Australian Bureau of Statistics has the full labour force report. 

Here is a graphical representation of the data, taken from the report: 

Eurogroup meeting: Greece unable to reach a deal with Euro

In the Eurogroup meeting, Greece was unable to reach a deal with the European Union regarding a bailout programme.

Since the left-wing party, Syriza took over the government last month, austerity measures were set to end.

According to CNBC, Alan Greenspan, the former Federal Reserve Chair said that eventually Greece will have to leave the euro zone.

UK manufacturing production falls to 0.1%

The UK manufacturing production has taken a drop by declining to 0.1% in January, a large drop from the previous period`s 0.8% growth. This is largely attributed to the maintenance work done on the North Sea oil and gas line.

Prime Minister David Cameroon wants the UK economy to be more export oriented but weakness in the euro zone has left the economy reliant mostly on consumer demand remarked Reuters.

The key points in the report include:
- Total production output is estimated to have increased by 0.1% between Q3 2014 and Q4 2014. The largest contribution to the quarterly growth came from manufacturing, which increased by 0.2%.
- Total production output increased by 1.4% between 2013 and 2014. Of the four main sectors, manufacturing output was the only one to rise, increasing by 2.7%.
- Total production output is estimated to have increased by 0.5% in December 2014 compared with December 2013. Manufacturing output was the only main sector to rise, increasing by 2.4%.
- Total production output decreased by 0.2% between November 2014 and December 2014. The largest contribution to this decrease came from mining & quarrying, which decreased by 1.4%.
- Manufacturing output increased by 0.1% between November 2014 and December 2014. The main contributors to the increase were computer, electronic & optical products; the manufacture of transport equipment; and the manufacture of food products, beverages & tobacco.
- In Q4 2014, production and manufacturing were 10.5% and 5.1% respectively below their figures reached in the pre-downturn GDP peak in Q1 2008.
- The preliminary estimate of GDP, published on 27 January 2015, contained a forecasted decrease of 0.1% for production in Q4 2014. This release of data estimates that production increased by 0.1% between Q3 2014 and Q4 2014 and the impact on the previously published GDP estimate for Q4 2014 is minimal.

Head over here for the full report by the Office of National Statistics.

China`s CPI down to 0.8%

China`s consumer price index (CPI) dropped to 0.8% in January, and producer prices decelerated to the lowest level in five years. The tumble in commodity prices have pushed the inflation down while raising real interest rates.

Bloomberg mentioned that this signals more room for monetary easing.

For a graphical representative of the CPI and PPI numbers, head over to zerohedge.

NAB: Low business confidence in Australia

Once again the NAB business confidence level hovered at one of the lowest points since the mid-2013 elections.

A cut in bank rates by the Reserve Bank of Australia (RBA) is expected by some traders.

The Australian Business Review has a write up on the business confidence today.

OPEC`s February report

Regarding oil supply:

" Non-OPEC oil supply for 2014 was revised up by 20 tb/d to 56.23 mb/d. The estimated growth was also revised up by 10 tb/d to 1.99 mb/d over the previous Monthly Oil Market Report (MOMR). This revision – mostly driven by upward 4Q14 revisions in the OECD, Brazil, Kazakhstan and China – was partially offset by downward revisions for Azerbaijan, Other Asia Pacific, Australia and Mexico. Non-OPEC oil supply in 2015 is projected to grow by 0.85 mb/d, mostly in the 1H15, down by 0.42 mb/d from the previous assessment, to average 57.09 mb/d, mainly due to announced capital expenditures (capex) cuts for 2015 on the part of international oil companies, as well as a decline in the number of active drilling rigs in the US and Canada, geopolitics and a heavy annual decline in Russian brownfields."

The full OPEC report can be found here.

Speech by Governor Stevens

The Reserve Bank of Australia (RBA) Governor Glenn Stevens gave a speech earlier today in Sydney during a luncheon. This was somewhat an informal speech and the full text can be found here.

Key indicators this week (Week 7)

Sunday
- China`s trade balance

Monday
- RBA Governor Stevens speaks

Tuesday 
- NAB business confidence
- Chinese CPI
- UK manufacturing production

Wednesday 
- Eurogroup meeting

Thursday 
- Australian employment change
- Australian unemployment rate
- BOE Governor Carney speaks
- BOE inflation report
- US core retail sales
- US retail sales
- US weekly unemployment claims

Friday 
- RBA Governor Stevens speaks
- Prelim UoM consumer sentiment

Surplus in China

China posted a huge surplus of 60.0 billion, exceeding December`s 49.6 billion. This is due to the fall in imports thanks to the drop in commodity prices.

Non-farm employment and unemployment rate rise

Unlike the ADP figures on Wednesday, the actual non-farm employment change saw 257 thousand new jobs being created in January, beating the forecasted 236 thousand. This is still short of December`s solid 329 thousand.

In terms of the unemployment rate, January saw a slight climb to 5.7%, missing estimates and the prior period`s 5.6%.

The employment situation report in the US can be found here.

Swiss foreign reserves up

The Swiss foreign currency reserves increased to 498.4 billion in January, up from 495.1 billion. This increase is said to be due to the Swiss National Bank`s (SNB) earlier decision in appreciating the CHF. The SNB however has declined to comment regarding the decision to increase the CHF`s value.

RBA monetary policy statement

The RBA monetary policy statement can be found here. I`ll summarize it when I`m back to my usual health.

Economic updates 30/1 to 5/2

I was sick earlier this week and thus did not update this journal. Instead of backtracking all the updates per post or skipping them all together, I`ll combine all of them this in one post.

Friday (30/1)
US advanced GDP for the forth quarter recorded a 2.6% growth.

Sunday (1/2)
China`s manufacturing PMI dropped to 49.8 vs estimated 50.3 and prior period`s 50.1.

Monday (2/2)
HSBC final manufacturing PMI dropped to 49.7 vs estimated 49.7 and prior period`s 49.8.
UK manufacturing PMI accelerated to 53.0 vs estimated 52.9 and prior period`s 52.7.
ISM manufacturing PMI contracted slightly to 53.5 vs estimated 54.9 and prior period`s 55.5.

Tuesday (3/2)
Australian building approvals dropped to -3.3% vs estimated -4.8% and prior period`s 7.7%.
Australian trade balance at -0.44 billion vs estimated -0.85 billion and prior period`s -1,02 billion.
Cash rate down to 2.25% vs estimated 2.5% and prior period`s 2.5%.
RBA rate statement.
Spanish employment changed improved to 78.0k vs estimated 83.4k and prior period`s -64.4k.
UK construction PMI grew to 59.1 vs estimated 56.1 and prior period`s 57.6.
GDP price index accelerated to 9.6% vs prior period`s 1.0%.

Wednesday (4/2)
New Zealand employment change improved to 1.2% vs estimated 0.8% and prior period`s 0.9%.
New Zealand unemployment rate at 5.7% vs estimated 5.3% and prior period`s 5.4%.
RBNZ Governor Wheeler`s speech.
UK services PMI increased to 57.2 vs estimated 56.6 and prior period`s 55.8.
ADP non-farm employment change dropped to 213k vs estimated 224k and prior period`s 253k.
ISM non-manufacturing PMI improved slightly to 56.7 vs estimated 56.6 and prior period`s 56.2.

Thursday (5/2)
Australian retail sales dropped to 0.2% vs estimated 0.3% and prior period`s 0.1%/
UK official bank rate unchanged at 0.5%.
US trade balance deficit widened to 46.8 billion vs estimated 38.2 billion and prior period`s 39.8 billion.
US unemployment claims 278k vs estimated 287k and last week`s 267k.

Australian housing market is booming

Business Insider termed the housing market as on fire in Australia. New building approvals accelerated by 7.9%, a major leap from last month`s -2.8%.

The article also warns about an imbalance in the economy as the only growth engine is fueled by the housing market.

The full report for the building approvals in January can be found here.