July 18, 2013
High income (1)
US data are mixed, with industrial productiongrowth easing, but consumer confidence andlabor markets continue to mend.
Final Q1 GDP estimates were revised down to1.8% growth (q/q saar) from 2.4% initially esti-mated due to weaker consumer and businessspending. IP growth eased to 1.6% (3m/3msaar) in May from 2.9%, with the June manufac-turing PMI also signaling slower output growth.
On the plus side, the Conference Board consum-er confidence index rose 7.1 points to 81.4 inJune, the highest in nearly 6 years, while laborand housing markets continue to mend.
Equities which had fallen in June due to uncer-tainty about the tapering of quantitative easingpolicies have reached new highs on reassuranceby the Federal Reserve that currently loose mon-etary policy would be maintained for some time.
Euro Area data indicate an easing in the down-turn, although fiscal consolidation and tightcredit conditions in the periphery remain a drag
Euro Area IP growth gained momentum rising by3.5% (3m/3m saar) in May, up from 2.9% in April.The improvement was led by a strong accelera-tion in Germany’s IP growth to 9.1% (from 6.2%)but also in other Euro Area economies. Germanfactory orders, a gauge of future investmentspending continued to grow at a strong pace.
However the June manufacturing PMI fell in Ger-many to 48.6, the second consecutive monthly fallon renewed weakness in new orders and declinesin employment.
Although PMIs rose in other EU countries, theindex has risen to or above the 50 line separatinggrowth from contraction only in Ireland (50.3)and Spain (50.0). In addition, unemploymentcontinues to increase while credit remains tightand house prices continue to fall.
Activity remained strong in Japan supported byaggressive monetary easing.
Industrial activity and consumer spending re-mained strong. IP rose by 7.1% (3m/3m saar) inMay from 5.2% in April. Retail sales rose by 1.9%(3m/3m saar) down from 3.1% in April.
Manufacturing PMIs point to faster expansion inoutput. Meanwhile consumer confidence is at aseven year high with 80% of Bank of Japan surveyrespondents expecting higher inflation in a year.
Data show the US economy continuing to heal, with retail spending gaining momentum and consumer confi-dence rising strongly, although industrial output growth and business confidence are weak. Euro Area IP ac-celerated in May led by Germany as well as a recovery in the troubled periphery economies. Forward lookingmanufacturing PMIs Improved for all except Germany. Industrial output and consumer spending gained fur-ther momentum in Japan in line with rising business and consumer sentiment with the latter at a 7-year high.
Manufacturing purchasing managers index (PMI)
Source: World Bank Prospects Group and MarkitLast updated: Jul. 17, 2013
-20-15-10-50510152025May-11 Nov-11 May-12 Nov-12 May-13
HIY retail sales
Volume, 3mma saar % chg
US Japan Germany EMU
-30-20-100102030405060May-11Aug-11Nov-11Feb-12May-12Aug-12Nov-12Feb-13May-13Jap: Core orders ex ships, utilitiesUSA: New orders durable goods ex transportGer: Total new orders
HIY Machinery Orders
(3m/3m saar % chg)