Here's the Economic Calendar for the week commencing the 28th of November 2010. This week December starts! So the PMI data will start flowing with releases expected from China, Japan, the US, and the EU, among others. There's also some more GDP data out this week with Australia, Canada, and Switzerland announcing their Q3 results. In the US there's the S&P/Case-Shiller house price index, consumer confidence, nonfarm payrolls, and the Beige Book from the Fed. [more]
This week we review the Q3 GDP revisions from the US and UK, then we look at the October CPI data from Canada and Japan, before finishing with a summary of a selection of emerging market monetary policy decisions over the past week.
1. US Q3 GDP Revision
US Q3 GDP was revised up to a 2.5% seasonally adjusted annualised rate, from the previous estimate of 2.0%, this was ahead of expectations for 2.4%. Within the results final demand was revised up, and net exports made a smaller negative contribution. Year on year GDP is up 3.2% vs 3.0% in the September quarter. Overall the result is relatively strong, showing a continuation of the bounce back, and it could well gain momentum, but the more likely outcome is ups and downs over the next year.
2. UK Q3 GDP Revision
UK GDP expanded 0.8% from the June quarter, in line with previous data, and placing the UK economy ahead by 2.8% compared to 2009. In the detail the stronger sectors were construction, manufacturing, exports, and transport, storage and communication services. While the weaker sectors were mining and utilities. The UK economies continues to bumble along out of recession, but it is quite promising that exports are expanding, the test will be how the UK government can manage its budget and how monetary policy plays out from here.
3. Japan Consumer Price Index
Japan saw its first positive year on year inflation rate in October, with CPI increasing 0.2% year on year, vs -0.6% in September. But it can't really be said that deflation is done, as much of the increase in the CPI was related to an increase in tobacco taxes. But it will be a welcome result to the Bank of Japan, which has been trying and trying to stimulate the economy and start inflation going again, instead of the persistent and pernicious deflation.
4. Canada Consumer Price Index
Canada saw a bit of a jump in inflation in October, with the CPI increasing 2.4% year on year vs 1.9% in September. This has caused the market to anticipate further rate rises from the Bank of Canada, which last changed the key policy rate to 1.00% in September, as part of a gradual normalization of monetary policy. Canada in many ways has been relatively lucky in coming through the crisis, and is in some ways similar to Australia, with its rich natural resources.
5. Monetary Policy Review
The past week saw several emerging market economies review their monetary policy interest rate settings, including; Russia, Mexico, Georgia, Kenya, Poland, Nigeria, Angola, and Israel. The main standout was Angola, which slashed its benchmark rate -394 basis points to 18.00% as a new central bank governor took the helm. Nigeria and Israel also made adjustments to the spread between borrowing and lending around the main policy rate, as steps towards policy normalisation following the global recession. But basically the main theme was a lot of holding rates, with much of the justification being that rates were appropriate at current settings either due to inflation being contained or relatively high, and overall balancing the risks of growth and inflation.
So we saw GDP expanding in the US, and at a faster pace than expected, and with promising signs in the details. Meanwhile in the UK the results were also relatively positive. But for both nations the challenge for their economies will be to carry on the momentum of the initial bounce back - but in a sustainable manner.
On the inflation and monetary policy front, there were positive, but not fabulous results in Japan, as the first positive headline inflation figure came through in almost 2 years. While Canada saw an acceleration of inflation, and speculation of further rate hikes. On monetary policy, there was a few meetings over the week but very little action, as settings were seen appropriate in achieving the balance between growth risks and inflation risks.
1. US Bureau of Economic Analysis www.bea.gov
2. National Statistics Office www.statistics.gov.uk
3. Trading Economics www.tradingeconomics.com
4. Trading Economics www.tradingeconomics.com
5. Central Bank News www.centralbanknews.info
Article Source: http://www.econgrapher.com/top5graphs27nov.html [more]
Here's the Economic Calendar for the week commencing the 14th of November 2010. This week there's Japan Q3 GDP, with consensus picking a small acceleration from Q2. There's also meeting minutes due out from the BoE and RBA, which will be interesting in light of their recent decisions. Of course there's also a line up of inflation stats from the US, UK, and EU, as well as industrial production and retail sales stats. [more]
This week we review some of the key data and events in China over the past week. And what a week it was on the China front, with another 50bp hike to the required reserve ratio, and the market closing down just over 5% on Friday. The data we chart in this edition is China inflation, industrial production, international trade, retail sales, and loan growth.
1. China Inflation
China surprised the market with its October inflation data showing CPI up 4.4% year on year, vs an expected 4.0% and previous 3.6% (inflation was in negative territory this time last year). Much of the increase in inflation was driven by food prices.
2. China International Trade
China saw its trade surplus expand to $27 billion in October, vs $17 billion in September. Exports fell from September to $136 bilion from $145 billion (up 22.9% year on year) and imports fell to $109 billion from $128 billion (up 25.3% year on year).
3. China Industrial Production
China saw a slight slowdown in the expansion of the pace of industrial production in October, with the rate dipping to 13.1% from 13.3% in September; the PMI series on the other hand increased during the month with the HSBC index hitting 54.8 vs 52.9 and the CFLP rising to 54.7 from 53.8.
4. China Retail Sales
China saw a further all time record in retail sales, with October recording 1.43 trillion yuan in sales, up 6% from September, and up 22% year on year, as the end of year spike starts to come in prior to Chinese new year.
5. China New Loans
China saw new loans of 587.7 billion yuan in October (595.5 billion yuan in September), which along with the acceleration of inflation prompted the People's Bank of China to raise the required reserve ratio another 50 basis points. Money supply also continued to expand, with M2 up 19.3% and M1 up 22.1%.
So it was an interesting week on the China economic front. The acceleration of inflation, spike in new loans, and small monthly increase in property prices prompted the People's Bank of China to raise the required reserve ratio again, and probably paved the way for another interest rate increase before the year is out. But also of interest is the continued improvement in retail sales - an increasingly important indicator for China. And of course the trade figures almost look concerning with a bit of a drop in imports (will be following the November data closely). So it is interesting times in China, and with the speculation of further tightening from the PBOC, the Shanghai Composite Index fell 5% on Friday. But if anything it's probably a good thing - it means the economy is growing strong, perhaps too strong, and that tightening policy is actually a good thing as it may help make the economic expansion more sustainable. So if anything drops in the Chinese stock market could well be looked at as buying opportunities. Watch this space...
1. National Bureau of Statistics www.stats.gov.cn & People's Bank of China www.pbc.gov.cn
2. China Customs www.customs.gov.cn
3. CFLP www.chinawuliu.com.cn & Markit/HSBC www.markiteconomics.com & National Bureau of Statistics www.stats.gov.cn
4. National Bureau of Statistics www.stats.gov.cn
5. People's Bank of China www.pbc.gov.cn
Article Source: http://www.econgrapher.com/top5graphs13nov.html [more]
Here's the Economic Calendar for the week commencing the 7th of November 2010. This week is a China week, there's the monthly trade data for October, and the usual suite of CPI, retail sales, industrial production, fixed asset investment, and property prices. Other than that the big ones will be EU Q3 GDP, trade balances and industrial production data from a few countries, and the G-20 Summit in Seoul. [more]
This week we look at the PMI results for China and the US and reflect on their implications. Then we review the monetary policy decisions out over the past week including the announcement from the US FOMC. Then we wrap up with a look at the US employment figures for October, and the New Zealand employment stats for the September quarter.
1. China PMI
China saw a continued rebound in its manufacturing PMI figures for October, with the official CFLP figure rising to 54.7 from 53.8, and the the HSBC index rising to 54.8 from 52.9. Within the CFLP PMI index, the strong points were Production (57.1 vs 56.4), New orders (58.2 vs 56.3), and Inventory (49.5 vs 49.1), while the lower points were Employees (52.1 vs 52.4), and Supplier delivery (49.3 vs 50.4). So overall a reasonably good result, and reflects the continued strength in the Chinese economy - which is showing through into a higher stock market, with the SSE composite rising 15% in October.
2. US PMI
In the US, the October PMI result was also relatively positive with the main index rising to 56.9 from 54.4 driven by strength in new orders, production, and new export orders - with imports falling (a positive sign for net exports). While the non-manufacturing index also rose to 54.3 from 53.2, driven by strength in production, a large spike in prices, and back log of orders. So overall the October results for the US (unless there is some quirk to it) helps provide evidence or support for the non-double-dip scenario. So it is a positive, but at the same time the fundamentals are not quite there yet for economic growth to be anything more than subdued/baseline.
3. Monetary Policy Rates
In monetary policy the main event was the US FOMC announcing the $600 billion asset purchase program, to be implemented at a pace of $75 billion per month. The other major moves were tightening of monetary policy rates in Azerbaijan (100bps), Vietnam (100bps), Australia (25bps), and India (25bps), and loosening of monetary policy rates in Iceland (75bps), and Latvia (12.5bps). Meanwhile other banks held rates due to low inflationary pressures and a desire to keep stimulatory monetary policy conditions to aid the economic recovery e.g. US, EU, UK, Japan.
4. US Nonfarm payrolls
Back to the US, the October nonfarm payrolls pleasantly surprised to the upside, with 151k jobs added in October vs consensus 60k and previous -95k (revised to -41k). Private payrolls grew 159k in October vs 64k in September. Average hourly earnings crept up slightly 0.2% and the average work week was 34.3 hours vs 34.2 in September. So overall, as with the PMI results another good result for the US, a positive from the perspective that it's not going down, but there's still a long way to go before the ground lost during the crisis can be recovered.
5. NZ Employment situation
In New Zealand the Q3 employment report saw the unemployment rate dip to 6.4% from a revised 6.9% in the June quarter. Total persons employed grew by 22k, with part-time jobs increasing 12k and full-time jobs expanding 10k. Across the sectors the jobs growth was relatively broad based with most sectors adding jobs. The figure reflects the progress, albeit slow, being made in the New Zealand economic recovery, but the subdued nature is showing through with deleveraging playing through. One major challenge for New Zealand is the high exchange rate which will impact on net exports, but a key driver of that is weakness in the US dollar. In terms of monetary policy the RBNZ has likely finished tightenings for the year, but will likely continue early next year as the recovery unfolds.
So we saw relatively strong PMI results in China which showed the economy is still running strong in the middle kingdom. The US also showed strong results in its PMI stats, providing some comfort against the double-dip scenario, but not yet being able to offer more than a subdued, sub-trend economic growth outcome. In monetary policy the major banks are holding tight but other banks are acting as the case demands, with several emerging economies opting to tighten or normalise monetary policy as inflation risks trump growth risks. In employment, the US showed a strong result in October, and New Zealand also showed a pretty good result in Q3. So overall it's a scene of economic recovery, but all is not yet clear and well.
1. CFLP www.chinawuliu.com.cn & Markit/HSBC www.markiteconomics.com & Yahoo Finance finance.yahoo.com
2. Yahoo Finance finance.yahoo.com & Institute for Supply Management www.ism.ws
3. CentralBankNews.info www.centralbanknews.info
4. US Bureau of Labor Statistics www.bls.gov
5. Statistics New Zealand www.stats.govt.nz
Article Source: http://www.econgrapher.com/top5graphs6nov.html [more]