Top 5 Economics Graphs of the Week - 14 May 2011

This week we look at Euro Zone GDP and break out the economic growth results from Germany and France, and gauge how the Euro economies are progressing through the recovery. We also have a brief review of the inflation data from the US, and wrap up with a review of 12 monetary policy decisions of various central banks from around the world over the past week.

1. EU GDP
The euro area (EA17) reported Q1 GDP growth of 0.8% q/q, up from 0.3% in Q4 2010, bringing annual GDP growth to 2.5%, up from 2.0% in Q4 2010. Meanwhile the EU27 also recorded quarterly GDP growth of 0.8%, up from 0.2% in Q4 2010, bringing annual growth to 2.5%, up from 2.2% in Q4 last year. The worst performing economies on a quarterly basis were Portugal (-0.7%), Cyprus (0%), Italy (0.2%) and Latvia (0.2%). While the best performing economies on a quarterly basis were Lithuania (3.5%), Estonia (2.1%), and Germany (1.5%), with 1% growth rates in Belgium, France, Austria, and Slovakia. Thus for now, growth is relatively strong in the Euro region, in spite of the fiscal challenges on the fringe, but there are risks to the outlook.

2. German GDP
Germany reported Q1 GDP growth of 1.5% q/q, up from 0.4% in Q4 2010 (market consensus around 0.9%). On an annual basis the German economy expanded 4.8%, faster than the 3.8% recorded in Q4 last year (market consensus around 4.2%). Germany continues to prove its worth as a key growth engine in the EU, benefiting from a strong manufacturing and export base, as well as a sound financial system and strong government balances. Philipp Rosler, economics minister in Germany, said "Germany is the growth motor among the industrial nations - and not just in Europe".

3. France GDP
The French economy grew 1.0% in the first quarter of this year, faster than the 0.3% recorded in the previous quarter. On an annual basis GDP expanded 2.2%, up from 1.4% in Q4 2010. The French economy is slowly gathering pace, with the manufacturing and services sectors strong, yet much of the growth this quarter came from changes in inventories. Household spending and fixed capital formation also contributed positively, while net exports were a negative. French finance minister Christine Lagarde noted that Q2 GDP is likely to be weaker, but is still comfortable with a 2.0% growth target for 2011.

4. US Inflation
The US reported annual headline inflation of 3.2% in April, up from 2.7% in March as the CPI rose 0.4% m/m. Core inflation crept up to 1.3% in April from 1.2% the previous month, with core CPI up 0.2% m/m. Accelerating nflation around the world at the moment is larely a product of rising commodity prices - especially energy commodities. In the near term there may be some more moderation in commodities prices, but I don't see oil falling far and fast in the near term. What was a mild concern was the incidence of broader 'second round' inflation effects, with core inflation steadily rising. That said, while both headline and core inflation are rising, neither are accelerating at a historically excessive rate, core is still relatively low compared to the last 10 years.

5. Monetary Policy Review
The past week saw 12 monetary policy decisions. Those that increased interest rates were: Azerbaijan +25bps to 5.25% Poland +25bps to 4.25% Norway +25bps to 2.25% Peru +25bps to 4.25% and Chile +50bps to 5.00%. Meanwhile Ghana was the only country that eased policy, cutting rates 50bps to 13.00%. Those that held rates unchanged were: Indonesia 6.75% South Africa 5.50% Latvia 3.50% and South Korea 3.00%. Besides interest rate changes two economies lifted reserve requirements: Uruguay lifted its required reserve ratios 300bps to 15%, while China increase its RRR by 50 basis points to an average 21% for large banks.

Summary

A look at euro region GDP results showed the economic recovery is still strongly on track for the most part, but with due divergence and weakness at the periphery. While there remains downside risks to the outlook from economies like Portugal, Ireland and Greece, the outlook is still strong with the key economies like France, and especially Germany growing strongly. Elsewhere, the US saw an acceleration of inflation in April, but not yet at a worrying pace. On the monetary policy front the theme of emerging market tightening continued, and saw increasing involvement of developed economies in the monetary policy normalization process.

Sources:
1. EuroStat epp.eurostat.ec.europa.eu
2. EuroStat epp.eurostat.ec.europa.eu
3. EuroStat epp.eurostat.ec.europa.eu
4. Bureau of Labour Statistics www.bls.gov
5. CentralBankNews.info www.centralbanknews.info

Article Source: http://www.econgrapher.com/top5graphs14may11.html

Top 5 Economics Graphs of the Week - 26 Feb 2011

In this edition of the top 5 graphs of the week we review some of the GDP numbers coming out of the UK and Germany. Then we look at the consumer sentiment figures from the US, and take a look at the course of the US housing market. Finally we check out what's been going on in monetary policy; with a focus on the running theme of emerging market inflation.

1. UK GDP
The UK slipped into negative growth in Q4 2010, recording a q/q change in GDP of -0.6%, compared to 0.7% in the previous quarter. That put year on year growth at 1.5% from 2.5%, making the UK economic recovery seem somewhat short-lived. The results are not encouraging, especially in the backdrop of fiscal austerity measures and plans to fix the UK government financials. It brings to mind two ugly terms: stagflation and double-dip, stagflation is pretty much confirmed, but as for the double-dip, it remains to be seen. Speculation that a Bank of England rate hike may come has already been pushed out, so it remains a long hard road to economic recovery.

2. German GDP
Over in Germany, growth slowed down a little, but the EU economic powerhouse continued to surge along at about a 4% pace. Germany saw 0.4% growth q/q in Q4, compared to 0.7% in Q3, with the year on year growth rate at 4% in the past two quarters (3.9% in Q2). So it's clear where the strength is in the EU, which interestingly creates a bit of a tension; on the one hand you have the strong German economy, and on the other you have basket cases like the "PIGS". This remains a risk, but also a source of strength, for the course of the Euro and the EU over the coming year.

3. US Consumer Sentiment
In another positive sign for the US economy, the UoM Consumer Sentiment index continued to rise in February, at 77.5 vs 74.2 in Jan; with much of the rise coming from current conditions (86.9 vs 81.8 in Jan), but with expectations also rising (71.6 vs 69.3 in Jan). Also of interest though is the point that much of the jump in confidence was seen in the higher income households (driven by improving job prospects on the upper end of the socio-economic totem pole). As noted in the Reuters report: "Consumers are increasingly aware that the economy is improving and, more importantly, expect job prospects to become more favorable in 2011." However rising prices remains a thorn in the collective sides of consumers; but the key takeaway is that the result was good, and possibly signals further strength in the US economy.

4. US House Prices
The December results for the S&P/Case Shiller house price index showed further monthly declines with a -0.4% drop in December 2010, and an annual decline of -2.4%, extending a 6 month string of monthly drops in the 20-city index. The numbers just go to show that even though the rest of the US economy is starting to show more and more signs of life, the housing market still has a lot of ground to cover. The fact is that the fundamentals just aren't there to support rising house prices. But with the improving economy, rising consumer confidence, and slowly but surely improving job market, the higher probability outcome is stabilization or sideways movement in the price; rather than downward. But the housing market still remains a risk for the US economic recovery.


5. Monetary Policy Review
The monetary policy scene was dominated by emerging markets in the past week, with Russia, Colombia and Israel hiking rates 25bps and Vietnam going for another 100bps (on top of a 200bp increase the week before). The running theme in the statements from the central banks were basically about the aggregate demand drivers (econ growth) as well as the supply/price side drivers i.e. commodity prices. Indeed the variety of supply hits around the world in agriculture have seen a strong run up in agriculture commodity prices; energy has also popped up somewhat, but metals have also seen a rally (with copper still being a benefactor of emerging market growth). So the emerging markets inflation theme will likely continue for most of this year and of course creates a bit of policy risk - i.e. can the c.banks get inflation under control without stomping out econ growth?

Summary

So we saw what looked like the UK economy heading into a double dip, recording a negative quarter of GDP growth in December last year. Then we saw the opposite in Germany; continued strength and a source of stability (but possibly also instability) in the Euro Zone. In the US the consumer appeared to be getting more confident as conditions start to improve; adding signs of momentum in the US economic recovery. But the US housing market remained in the doldrums in December, as the fundamentals are yet to support more than stabilization in prices. Finally, in monetary policy we saw more tightening as the running theme of emerging market inflation played through, with policy risks proving that emerging market growth may not be such a sure thing over the medium term.

Sources
1. OECD Statistics stats.oecd.org/index.aspx
2. OECD Statistics stats.oecd.org/index.aspx
3. Thomson Reuters customers.reuters.com/community/university/default.aspx
4. Standard & Poor's www.standardandpoors.com
5. CentralBankNews.info www.centralbanknews.info

Article Source: http://www.econgrapher.com/top5graphs26feb11.html

Top 5 Economics Graphs of the Week - 28 August 2010

This week we take a look at GDP stats from the robust German economy, and the less than robust US economy. Then we look closer at the US situation; reviewing the existing home sales data, and consumer sentiment data. We then wrap up with a review of the July trade figures from Japan.

1. German GDP
Germany proved itself to be one of the strongest developed economies (and certainly within the EU). Overall the German economy grew 2.2% compared to the previous quarter (the fastest growth rate since East and West Germany reunified). The surge in growth was driven by strong exports, up 8.2% in Q2; boosted by trade with China and the US... which should immediately raise some concerns given the slowing of those two economies. However equipment investment (up 4.4%) also grew relatively strongly; and consumer spending returned to growth (0.6%). So there are growing signs of fundamental strength in the German economy, as well as from the rebound in international trade.


2. US GDP
The US economy showed further signs of descending into the double dip as the second quarter GDP growth rate was downgraded to 1.6% annualised (0.4% q/q) vs initial reading of 2.4% annualised (0.6% q/q). The downgrade was driven by a higher net export deficit and smaller gain in inventories; as well as residential investment and government purchases; these were partially offset by slight upward adjustments to personal consumption and nonresidential fixed investment. From here the vulnerability and weight of risks is almost certainly weighted to the downside, there's a weakening housing market, a still high unemployment rate, a necessary period of deleveraging to go through; so the weight of probabilities is for a dip back into negative growth. The best case scenario would be for stagnant growth (the muddle ages).


3. US Existing Home Sales
US existing home sales confirmed concerns by many that the US housing market is still a major risk area for the US economic recovery. On a seasonally adjusted annualised basis existing home sales dropped to 3.83 million from 5.37 million in June (consensus was for a dip to just 4.65m). Supply at the current sales rate expanded from 8.9 months to 12.5 months - the worst reading in 11 years. For now prices have only dipped slightly, with reluctant sellers not yet giving in, the median price dipped to $182,600 from $183,700 in June. So, as noted above, unless something radical happens, the US housing market remains a critical threat to the US economic recovery.


4. US Consumer Sentiment
On a similar vein, the Reuters/University of Michigan Consumer Sentiment index crept along, rising slightly from the July reading (68.9 vs 67.8). Expectations improved less; 62.9 vs 62.3 and current conditions improved to 78.3 from 76.5. Overall the impact of scarce jobs and stagnating incomes have spurred consumers to hunker down; taking a more defensive outlook with the whole deleveraging and cash reserve building behaviour becoming more and more endemic (and for good reasons). The data lines up with the weak housing data, and slowing trend in the GDP data; unless the manufacturing sector really pulls a rabbit out of the hat; and exports somehow surge, the outlook keeps coming back to the scenario of a double dip.


5. Japan Trade
Japan saw a continuation of the recovery in exports (and imports), but at a slightly slower pace. Looking to the chart its clear the trend is showing a recovery, but still; exports are well below trend, and are still yet to return to levels seen prior to the crash in global trade. Exports climbed 23.5% year on year to 5.983 trillion yen ($71 billion), the year on year growth rate in June was 27.7%. Interestingly the key driver of growth was continued sales of cars and electronic components to emerging economies like China and other Asian countries; which is promising somewhat given their higher potential growth rates. But the Japanese Yen has been appreciating, and this could reduce export competitiveness. So for Japan, trade remains the key to sustaining economic growth, but the downside risks remain.


Summary

So we saw two key developed economies provide updates on their GDP situations. On the one hand there was Germany - albeit caught up still with some of the wider EU risks - which was showing surprising resilience, with strong exports, growth in investment, and even a return of consumer spending. The signs are for continued strength in the German economy.

The US however showed weakness on almost all fronts; and the housing data and consumer sentiment data did nothing to provide comfort. It's becoming increasingly harder to get to any other conclusion than for a double dip. The best case is likely to be a prolonged period of stagnant growth, aka the muddle ages of the recovery.

Over to Japan, the challenges of deflation (which increased to -1.1% in July), high government debt, and low consumer spending; were carried once again by strength in trade. But again, as some of its key trade partners show signs of slowing, and as the Yen appreciates, the outlook is probably also for relatively stagnant growth at best.

Sources
1. OECD Stats stats.oecd.org
2. Bureau of Economic Analysis www.bea.gov
3. Realtor.org www.realtor.org
4. Reuters/Univesity of Michigan customers.reuters.com
5. Japan External Trade Organization www.jetro.go.jp

Article Source: http://www.econgrapher.com/top5graphs28aug.html

Economic Calendar - 23 August 2010

Here's the Economic Calendar for the week commencing the 23rd of August 2010. This week there's Q2 GDP results from 3 key developed economies; Germany, UK, and the US. On the US, there's also new home/existing home sales, the house price index, and both ABC and University of Michigan consumer sentiment indexes. Elsewhere, Japan will be releasing 3 key stats; exports, CPI, and employment figures. And of course another key feature of this week is the Jackson Hole Symposium at the end of the week; an exclusive monetary policy festival in the US.

(More commentary follows the table)

Day	Time (GMT)	Code	Event/Release	Forecast	Previous
MON	08:00	EUR	Euro-Zone PMI Services (AUG A)	55.5	55.8
MON	08:00	EUR	Euro-Zone PMI Composite (AUG A)	56.4	56.7
MON	08:00		Euro-Zone PMI Manufacturing (AUG A)	56.4	56.7
MON	12:30	USD	Chicago Fed National Activity Index (JUL)		-0.63
MON	14:00	EUR	Euro-Zone Consumer Confidence (AUG A)	-13	-14
MON	03:00	NZD	RBNZ 2-Year Inflation Expectation (3Q)		2.8%
TUE	06:00	EUR	German GDP s.a. (QoQ) (2Q F)	2.2%
TUE	06:00	EUR	German GDP w.d.a. (YoY) (2Q F)	3.7%	1.6%
TUE	06:00	EUR	German GDP n.s.a. (YoY) (2Q F)	4.1%	1.7%
TUE	06:00	EUR	German Imports (2Q F)		6.1%
TUE	06:00	EUR	German Exports (2Q F)		2.6%
TUE	09:00	EUR	Euro-Zone Industrial New Orders s.a. (MoM)	1.5%	3.2%
TUE	09:00	EUR	Euro-Zone Industrial New Orders (YoY) (JUN)	24.2%	22.9%
TUE	12:30	CAD	Retail Sales (MoM) (JUN)		-0.2%
TUE	14:00	USD	Existing Home Sales (JUL)		5.37M
TUE	14:00	USD	Richmond Fed Manufacturing Index (AUG)	12	16
TUE	14:00	USD	Existing Home Sales (MoM) (JUL)		-5.1%
TUE	21:00	USD	ABC Consumer Confidence (JUL)
TUE	23:50	JPY	Merchandise Trade Imports (YoY) (JUL)	19.8	26.1
TUE	23:50	JPY	Merchandise Trade Exports (YoY) (JUL)	21.8	27.7
WED	12:30	USD	Durable Goods Orders (JUL)	3.0%	-1.0%
WED	12:30	USD	Durables Ex Transportation (JUL)	0.5%	-0.6%
WED	14:00	USD	House Price Index (MoM) (JUN)		0.5%
WED	14:00	USD	New Home Sales (JUL)	330K	330K
WED	14:00	USD	New Home Sales (MoM) (JUL)	0.0%	23.6%
WED	14:00	USD	House Price Purchase Index (QoQ) (2Q)		-1.9%
THU	12:30	USD	Initial Jobless Claims (AUG 21) (AUG 21)	485K	500K
THU	23:30	JPY	National Consumer Price Index (YoY) (JUL)	-0.9%	-0.7%
THU	23:30	JPY	Jobless Rate (JUL)	5.3%	5.3%
THU	23:30	JPY	Tokyo Consumer Price Index (YoY) (AUG)	-1.1%	-1.2%
THU	00:00	EUR	German Consumer Price Index (YoY) (AUG P)	1.1%	1.2%
THU			Jackson Hole Symposium (Monetary Policy)
FRI	08:30	GBP	Gross Domestic Product (QoQ) (2Q P)	1.1%	1.1%
FRI	08:30	GBP	Gross Domestic Product (YoY) (2Q P)	1.6%	1.6%
FRI	12:30	USD	Gross Domestic Product (Annualized) (2Q S)	1.4%	2.4%
FRI	12:30	USD	Personal Consumption (2Q S)	1.7%	1.6%
FRI	12:30	USD	Gross Domestic Product Price Index (2Q S)	1.8%	1.8%
FRI	12:30	USD	Core Personal Consumption Expenditure (QoQ)	1.1%	1.1%
FRI	13:55	USD	U. of Michigan Confidence (AUG F)	70.0	69.6
FRI			Jackson Hole Symposium (Monetary Policy)

So the main data releases dues out this week are some more Q2 GDP results from some pretty key developed economies. Up first is Germany, which is expected to show year on year growth of 3.7%, compared to 1.6%; as one of the EU's strongest economies recovers well due to its relatively stronger fiscal position and machine exports to China. The next up is the UK, which is expected to show similar results to that of Q1 this year as the British economy muddles along. Then there's the US; which is expected to show 1.4% compared to 2.4% last time; as the growth decelerates into the double dip or muddle ages of the recovery.

Another key set of data out this week is the stats due from Japan. First up is Japan's international trade stats with merchandise trade imports and exports for July; both are expected to show slightly lower growth on an annual basis; these stats will be critical to watch as the Japanese economy has shown itself to be particularly sensitive to international trade. The next set of data from Japan is the CPI data, which is forecast to show the deflation rate (usually we call it the inflation rate when we talk CPI, but Japan has been so mired in deflation...). The jobless rate is also due out and expected to come in around 5.3%

As for the other bits of data out this week the main other ones of interest are (in no particular order); starting in the EU, there's EU consumer confidence, expected to remain pretty sick, EU PMI; sideways like a crab, and industrial new orders; growing but slightly less than May. In the US; existing home sales, ABC consumer confidence, durable goods orders - expected to pick up, new home sales - flat to to sideways at best, and UoM consumer sentiment on Friday - with maybe a slight increase. The RBNZ in New Zealand will also issue it's 2-year inflation expectation figures - important to monitor in the context of monetary policy, interest rates, and the NZD.

And on the topic of monetary policy, the Jackson Hole Symposium kicks off on Thursday in the US, with a star-studded line-up of central bankers from all over the world; where a couple of days of intensive debate and discussion will take place on the state of the global economy and the course of monetary policy. So keep monitoring the media around those days for what might emerge, in case anything of interest arises. The talk will probably focus on exit strategies, and how to avoid double-dips, lost decades, deflations, depressions, despair, destitution, etc.

So as always, have a great week, watch out for surprises, and stay tuned for updates...

Sources
DailyFX www.dailyfx.com/calendar
Forex Pros www.forexpros.com/economic-calendar/
Forex Factory www.forexfactory.com/calendar.php
Bloomberg www.bloomberg.com
+various statistics websites and central bank websites for verification

Article Source: http://www.econgrapher.com/23aug-calendar.html