EUR: M3 Money Supply growth slowed to 3.7%yoy in May from April’s 4.9%yoy growth. On a monthly basis, money supply grew 0.2% in May, its first month-on-month rise in four months. The 3mma also lost steam to grow 4.5% in May compared with 5.2% in April. Private Sector Credit Growth also slowed in May, rising 1.8%yoy compared with April’s 2.3%yoy increase. It was the slowest pace of private sector credit growth in the Euro-area on record as consumer credit declined further by 0.6%yoy in May on the back of April’s 0.4%yoy fall.
EUR: Flash HICP eased 0.1%yoy in June, the first annual decline in inflation on record.
The sluggishness in the credit markets continues. And that is getting reflected in consumer behaviour across the Euro-area. With the expectation of negative inflation in June, consumer spending is unlikely to find easy recovery.

GER: Unemployment Rate rose to 8.3% in June to 8.2% in May on a seasonally adjusted basis as the number of unemployed rose by 31k. The number of unemployed in April was revised upwards to 7k.

FRA: Producer Price Index fell 0.3%mom in May to be 7.8% lower over the year, a further fall from the 6.4% decline in April. On a monthly basis though, the price decline arrested from an upwardly revised 0.8% fall. A large part of the yearly decline came from the 50.5% drop in prices of coke and petroleum products, though they were up 3.0% over the month. Prices of manufactured products, mining products, and food and beverages saw heavy year-on-year declines. Import prices of industrial products nudged up 0.6%mom in May also on rising coke and petroleum product prices, but the index remained depressed by 10.7%yoy.

SWZ: The UBS Consumption Indicator fell 0.14 points to 0.77 in May and continued its downward trend. The indicator has now remained below its long term average for nearly three quarters. This month’s decline was led by new car registrations and consumer sentiment.

We have been saying for the last couple of weeks now, the Swiss economy doesn’t seem to be bottoming out or poised for year-end recovery. The UBS indicator released today bears that out. Globally, the theme has shifted to jobs and so is the case in Continental Europe. Despite jobs usually thought of as a lagging indicator in terms of recovery, the fall in job losses or the abatement in unemployment is yet to turn significant enough for recovery celebrations.

UK: Real GDP Growth contracted 2.4%qoq in Q1 2009, its biggest contraction in a little over 50 years, and worse than market expectations of a 2.1%qoq decline. Compared with the same quarter last year, economic activity contracted nearly 5.0%. Manufacturing output was down 5.1%qoq while services sector output fell 1.6% in the first quarter of the year. Construction activity plunged 6.9%qoq on the back of a 5.0% decline in the previous quarter. Consumer spending came in 1.3% lower this quarter vis-a-vis Q1 2008. With all the stimulus packages in the works, Government spending was the only saving grace, as it rose 0.2%qoq to be 2.8% higher over Q1 2008. Fixed investment saw a further slump with a 7.5%qoq decline and a massive 13.2% plunge over the year. Net exports printed at GBP8.0 billion, an improvement from GBP8.4 billion in the previous quarter.

UK: The Nationwide House Price Index rose 0.9%mom in June though year-on-year prices were 9.3% lower, an improvement in the pace of decline compared with May’s 11.3%yoy fall. Even in the three months to June, prices were up 0.9%mom, the first price rise since December 2007. The average price of a UK home now stands at GBP156.4k.
Again, we at GEW have been repeatedly writing that the UK economy is nowhere near recovery. Today’s GDP numbers are a major disappointed. Economic activity in Q1 hasn’t picked up at all, nor has the pace of decline slowed to think that the bottom has been put in place. The impact of Government spending also appears to be receding and despite record low interest rates there’s no consumer spending in sight. What’s further worrying is that construction activity is collapsing even in a low interest rate regime. The hope is that credit market sluggishness and output shrinkage could perhaps force the BoE to consider a 25bps rate cut.

CAN: Real GDP Growth was 0.1% lower over the month in April following a 0.3% fall in March and contracted 3.0% over the year as manufacturing output continued to see desperation with a 13.8%yoy decline, and one percent lower activity over the month. Along with manufacturing, mining output which was 0.7% lower over the month also dragged down output in the goods producing sector. Output in the services sector came in flat over the month to be down 0.6%yoy. Retail sales was a major drag on the sector with monthly activity down 0.6% while year-on-year sales were 3.8% lower. Even though construction activity struggles, the home resale market was a bright spot as real estate agents posted an 8.2% monthly increase in output in April.
CAN: Industrial Product Price Index fell a strong 1.1%mom in May, following a 0.5% decline in April. The index is now 4.3% lower compared with May 2008. Ex-petroleum and coal, the index stood 1.6% lower on a monthly basis in May. The index was driven lower by prices of dairy products which were down 1.0%mom; pulp and paper products that lost 3.1% over the month; primary metal s that were 2.4% lower over the month; and transport equipment prices which fell 4.0%mom. Prices of both intermediate goods and finished goods also ended lower in May. The Raw Materials Price Index rose 2.2%mom in May but still remained weak over the year by 31.6%. Most of the monthly gains in the index came from mineral fuel prices which rose 6.2% even as other components saw declines.

USA: S&P Case-Schiller House Price Index dropped 18.1%yoy in April, a slower pace compared with the 18.7%yoy declne in March and better than market expectations of an 18.6%yoy decline. On a monthly basis, house prices were 0.6% lower in April. The yearly price decline was led by Detroit, Las Vegas, Los Angeles, Miami, and Phoenix, while eight of the 20 cities in the index showed a monthly price pick up.
USA: Chicago PMI picked up five points to 39.9 in June as all components of the index posted gains. New orders rose 4.3 points to 41.6; order backlog jumped 11.3 points to 37.6; and the employment index rose 3.9 points to 28.9 to add to the monthly gain in the index.
USA: Conference Board Consumer Confidence Index lost 5.5 points in June to print at 49.3 following a revised May and breaking the upward moves of the last two months. The Present Situations Index fell 4.9 points to 24.8 but more importantly the Expectations Index dropped six points to 65.5 in June as consumers outlook changed and the job outlook turned more pessimistic.Consumer expecting improved business conditions over the next six-months lowered to 21.2% compared with 22.5% in May, while those expecting fewer jobs increased to 27.3% in June from 25.6% in the previous month.
The employment theme is at work again as consumer confidence failed to catch the momentum of the past two months largely due to the jobs outlook. And even though house price decline slowed down, going forward, the pick up in home sales would have largely become a function of the employment situation.