JPN: Preliminary Industrial Production showed an increase of 2.4% in June, its fourth month-on-month gain in a row but at a slower pace compared with May’s 5.7% output gain. Over the three months to June production output grew 8.3%, the most in over five decades. Industrial output however remained sluggish on an annual basis, down 23.4%. The increase in monthly production was led by industries engaged in electronic parts and devices, steel and iron production, and chemical manufacturers. Shipments increased 3.5%mom in June, also its fourth straight increase, led by an increase in shipments of transport equipment. Over the year, shipments continued to remain weak, down by 22.6%. Inventory eased 1.0% over the month in June to be 10.2% lower over year ago levels. The survey of production forecast shows an increase of 1.6% in output in July with transport equipment, electronic parts, and general machinery leading the gains. The production forecast for August stood at 3.3%.
Industrial output has been making gains on a monthly basis, but it is really the year-on-year numbers that provide a sense of the magnitude of job losses that have already taken place. And further job losses would mean that weak annual production would continue. Nevertheless, monthly recovery appears to be backed by inventory pick up and a decreasing inventory-shipment ratio. That means, another couple of months of sustained output growth should certainly translate to economic growth over the June and September Quarters.
GER: Seasonally adjusted Unemployment fell 6.0k in July after a revised 27.0k rise in June. However, without adjustments, unemployment rose 30.0k over the month, lower than expectations of an increase of 45.0k in job losses. The total headline unemployment nevertheless increased 52.0k in July even as the Unemployment Rate held at 8.3% in July.
Over the last couple of weeks, we at GEW have grown in confidence about the economic recovery underway in Germany, which is likely to see robust life by the year-end. Today’s unemployment data helps put a further layer of concrete over the year-end recovery argument in Germany, though unemployment remains its own worst enemy, especially since much of the would be job losses have been cushioned by truncated work hours and the Government’s stimulus plan. Moreover, Euro-area sentiment and business confidence seems to piggyback the German economy for a booster shot as the French economy struggles to get back on her feet.
EUR: The Economic Sentiment Indicator improved 2.8 points to 76.0 in July, the fourth straight monthly rise and the highest in nine-months as it printed better than market expectations, though it remains well below its long-term average of 100. Economic sentiment improved as industrial confidence gained three points to -30 in July; services confidence rose four points to -19; consumer confidence nudged up two points to -21; and retail trade sentiment increased three points to -14, even though the construction sector remained subdued. Industrial confidence gained on the back of improvements in production outlook which rose five points to -12; finished stocks that eased three points to 16; orders that nudged up a point to -61; and employment expectations which improved from -36 to -33 in July. Consumer confidence improved on expectations of a better financial situation, better economic situation, and price expectations that dipped to the lowest on record. However, capacity utilization at 70.2% remained weak in July. German economic sentiment jumped 3.2 points to 80.8, while economic sentiment in France rose a marginal 0.3 points to 81.2. Confidence in financial services was up three points to 2.0 in July, turning positive for the first time since September 2008. The Business Climate Indicator improved 0.21 points to -2.71 in July, largely on improving orders, especially export orders.
UK: The Nationwide House Price Index rose 1.3%mom in July to GBP158.9k, the third consecutive month of improvement in the index and more than the expected 0.2%mom rise. On an annual basis, house prices were 6.2% lower in July, the smallest price decline since May last year, as the pace of price fall slowed from June’s 9.3%yoy decline. In the three months to July house prices increased 2.6% from 1.0% in the previous month to be the highest in nearly two and a half years. Year-to-date, house prices have now increased 1.3%.
Here’s the thing, on the surface house prices are rising…Yahoo! However, underneath the surface, the current house price rise is not characterized as a demand driven phenomenon, rather it is a supply side constraint. That, in the backdrop of no serious pick up in home lending as revealed by yesterday’s BoE data means that housing demand would continue to face consumer caution.
CAN: The Industrial Product Prices Index increased 0.7%mom in June on the back of petroleum and coal products prices that rose 10.8%mom and primary metal prices which increased 2.2%mom as nickel and copper prices surged. The monthly increase came after two months of declines. Compared with June 2008, prices were lower by 5.4%, also led by petroleum and coal product prices which fell 36.5%; a 15.5% fall in primary metal products; and a 5.5% decline in chemical products. Excluding petroleum and coal products, producer prices eased 0.3%mom to be flat on an annual basis. The Raw Materials Price Index surged 6.2%mom in June after having risen 2.2%mom in the previous month, but prices were severely depressed on an annual basis - nearly 31% - as prices of mineral fuels declined 44.1%yoy and 12.4%mom. Excluding mineral fuels, raw material prices rose 0.8% over the month, but remained 9.3% lower over the year.
CAN: Non-Farm Payroll Employment dropped 64.0k in May, a 0.4% decline since April and a 2.1% drop over the year. With May’s fall, job losses have now totaled 423.9k since October 2008. The monthly decline in employment was led by manufacturing which lost 25.1k jobs; administrative services where 9.0k jobs were lost; education services which saw 10.5k job losses; and a loss of 2.7k managerial jobs. Average weekly earnings rose 0.3%mom to be 1.6% higher over the year in May, a pick up from the 1.1%yoy growth in April. The earnings pick up came from retail trade, mining, construction, information services, and food and accommodation services.
