Top 5 Economics Graphs of the Week - 18 December 2010

This week we review inflation data from the US and the EU. Also examined is Japan's influential Tankan business sentiment survey, and a check in on US housing starts. Finally we sum up with a look at some of the many monetary policy decisions from the past week.

1. US Inflation
The US recorded a 1.1% y/y headline rate of inflation in November (vs 1.2% in October), and core inflation of 0.7% (vs 0.6% in October). So overall a pretty ho-hum result, inflation at the consumer level is still quite subdued despite inflation pressure beginning to rise at the producer level; particularly in commodities. So the case remains that the Fed still has its work cut out in terms of spurring up inflation - but the question is, when will the new worry of inflation rather than deflation come about? this is one to watch carefully.

2. EU Inflation
Over in the EU, inflation rates were unchanged between October and November, with the EU rate at 2.3%, and the Euro-Area headline rate at 1.9% and the Euro-Area core rate was 1.1%. The same old story of significant diversity across the region applied with the highest rate of 7.7% recorded in Romania, and the lowest rate -0.8% in Ireland. And so the Euro experiment continues, inflation will likely gradually pick up over the next year, provided that the economic recovery doesn't get derailed (and there are a few risks floating around).

3. Japan Tankan
The influential business sentiment survey, the Tankan all companies index had fell to -11 from -10. Large manufacturers declined to 5 from 8, and large non-manufacturers fell to 1 from 2. Small manufacturers improved to -12 from -14 and small non-manufacturers fell to -22 from -21. Thus overall the results were relatively negative, reflecting the challenging economic conditions in Japan. Companies are finding the dual effects of fading stimulus and a stronger Yen to be having a negative impact.

4. US Housing Starts
Housing starts in the US were basically flat again, recording 0.555m vs consensus 0.550m, and previous 0.519. So the results look kinda good, but in a time series (as in the chart below) it's clear the market is still just muddling along. The only real good news out of this piece is that at least it didn't get worse, i.e. there appears to be some stabilizing.

5. Monetary Policy Review
In the past week the central banks of Sri Lanka, US, Hong Kong, Norway, Namibia, Sweden, Botswana, Egypt, Switzerland, India, Poland, Turkey, Chile, Columbia all met to review monetary policy settings. There were a few movements in interest rates with those to tighten being: Sweden +25bps and Chile +25bps, while those that dropped rates were: Namibia -75bps, Botswana -50bps, and Turkey -50bps. While the rest held steady, and the US made no alterations to its quantitative easing program.

Summary

So we saw inflation basically flat-lining in the US for now, over in the EU inflation appears to be gradually picking up but risks remain. Japan saw less than exciting results in the Q4 reading of the Tankan survey, and the US saw flat housing starts as the housing market appears to be stabilizing somewhat. On the monetary policy front we saw a couple tighten, a few drop, and most hold steady as monetary policy becomes more de-synchronized as the global recovery also becomes more de-synchronized.

Sources
1. US Bureau of Labour Statistics www.bls.gov
2. Eurostat epp.eurostat.ec.europa.eu
3. Bank of Japan www.boj.or.jp
4. US Census Bureau www.census.gov
5. CentralBankNews.info www.centralbanknews.info

Article source: http://www.econgrapher.com/top5graphs18dec.html

Top 5 Economics Graphs of the Week - 24 July 2010

This week we look at UK GDP, Canada monetary policy and inflation, review some of the monetary policy decisions of the week just gone, and then assess some of the housing data on the US real estate market.

1. UK GDP
The UK surprised in the second quarter of 2010, recording growth of 1.1% q/q vs expectations of a 0.6% increase, and accelerating since the previous quarters' much milder growth. However the growth spurt is widely expected to be short lived amid requisite government cuts in public spending. On an annual basis the UK economy grew 1.6%. But as with most advanced economies the bounce-back in late 2009 and early 2010 are likely to taper off into the 2nd half of 2010, potentially realising fears of a double dip recession, or at least proving true predictions of a stop-start, subdued recovery.


2. Canada Inflation and Monetary Policy
Canada (the first G-7 country to raise rates), again hiked its interest rate from 0.50% to 0.75% this week, while at the same time reporting inflation of 1% in June (down from 1.4% in May). The move was widely expected as the Bank of Canada looks to normalise monetary policy as the recovery becomes gradually more entrenched, indeed Canada is one of the luckier developed economies; finding peers in the likes of Australia and New Zealand as countries that are raising rates to ensure the sustainability of their relatively stronger recoveries. But the outlook for the Canadian economy, and the course of its monetary policy will probably depend as much on international events as domestic developments.


3. Monetary Policy Review
Along with the Bank of Canada raising its rate to 0.75% from 0.50%, the South African Reserve Bank left its rate at 6.50%, while Banco Central do Brasil increased its rate to 10.75% from 10.25% - a move that was less expected vs the consensus for a 75bps increase. The decisions show some of the spectrum of activity going on in monetary policy at the moment; there's countries like Brazil; with surging economic growth that are now switching the focus from growth to controlling inflation. While countries like South Africa are still trying to promote economic growth and recovery; yet others like Canada are beginning the process of normalisation. It just goes to show that while during the crisis the policy easing was synchronised, the path to normalisation will be anything but.


4. US Housing Starts
US housing starts in June fell to 0.549m on a seasonally adjusted annual basis, this was down both on May (0.593m) and consensus (0.58m). The lack luster results show that housing is still suffering from poor economic conditions, and a lack of tax credits. And while conditions remain significantly lower than pre-crisis levels, one positive was a slight improvement in permits. But it will take some time for the drop off in inventory building in the housing market to translate through to higher prices - which may be the thing needed to restart activity in this space; don't hold your breath though.


5. US Existing Home Sales
Another key US housing data point out this week was US existing home sales, the data reflected what is obvious - a generally weak housing market. The number of existing homes sold on a seasonally adjusted annualised rate was 5.37m for June, versus May figure of 5.66m, and up slightly versus consensus of 5.26m. The only positive in the report was the short term rise in prices, but this is likely to be largely temporary as the stubbornly high unemployment rate caps any further rises in prices, and housing inventories rise further to about 10 months. So again, surprise, surprise, the US housing market is still not well!


Summary

So we looked at UK GDP and saw that the recovery is chugging along, but that despite the spike up in Q2, it will be a long slow recovery, especially as the UK government looks to get its financial affairs in order.

On the monetary policy front we saw further normalisation from Canada, attempts at stimulating growth by South Africa, and further moves to hold off over-heating in Brazil. The conclusion remains, that while we saw a synchronised loosening of monetary policy during the crisis, the recovery will see a much less synchronised normalisation of monetary policy.

And last but not least, we reviewed some of the data that came out over the week on the US housing market; seeing that housing starts displayed continued weakness, and that existing home sales were still in poor shape. So aside from a likely temporary increase in prices in the existing home sales report, the US housing market is still in poor shape, and is unlikely to really gain wind until the rest of the economy goes through the recovery process.

Sources
1. UK National Statistics www.statistics.gov.uk
2. Bank of Canada www.bankofcanada.ca
3. Banco Central do Brasil www.bcb.gov.br & South African Reserve Bank www.reservebank.co.za & Bank of Canada www.bankofcanada.ca
4. US Census Bureau www.census.gov
5. National Association of Realtors www.realtor.org

Article Source: http://www.econgrapher.com/top5graphs24jul.html