GlobalSome stability has returned to financial markets over the past few days thanks to some inflation-friendly economic data, some dovish signals from several central banks, and most notably the Bank of Japan, together with some upbeat corporate earnings news. That said, heightened geopolitical tensions have kept investors anxious about the potential for a broader conflict in the Middle East. The recent narrowing of interest differentials between the US and Japan is additionally amplifying uncertainty about how a further unwinding of Japan’s carry trade might destabilise markets in the period ahead. In our charts this week, we examine some of the key messages from the latest Blue Chip survey of Economic Indicators (charts 1 and 2). We also highlight some of the key economic reports that have been published in the past few days, including Japan’s Q2 GDP figures (chart 3), and the latest inflation reports from the US and UK (charts 4 and 5). Lastly, we examine airport traffic statistics for the UK, Spain, and Germany (chart 6).
USA| Aug 15 2024U.S. Industrial Production Declines During July
- Factory production falls moderately; utility output plunges.
- Mining output holds steady.
- Capacity utilization declines sharply.
by:Tom Moeller
|in:Economy in Brief
- Vehicle sales strengthen while gasoline purchases edge higher.
- Core retail spending gain moderates.
- Furniture & electronics sales jump.
by:Tom Moeller
|in:Economy in Brief
- Index increase slightly to -4.7 but remained in negative territory for ninth consecutive month.
- Haver calculated ISM-type index also remained in contraction territory.
- New orders still negative while shipments were positive for third straight month.
- Employment indicators still weak.
by:Sandy Batten
|in:Economy in Brief
USA| Aug 15 2024Philly Fed Manufacturing Index Falls Markedly in August
- The headline index unexpectedly slumped to -7.0 in August from 13.9 in July.
- The first negative reading since January.
- However, the ISM PMI version calculated by Haver remained above 50 at 52.5.
- Employment fell to back below zero.
- Expectations also fell markedly.
by:Sandy Batten
|in:Economy in Brief
USA| Aug 15 2024U.S. Import and Export Prices Rose in July
- Slight rise in import prices led by jump in imported food prices.
- Imported fuel prices rose 0.5% after a 1.9% decline in June.
- Larger-than-expected increase in export prices due mostly to 2.2% surge in prices of exported industrial supplies.
by:Sandy Batten
|in:Economy in Brief
USA| Aug 15 2024U.S. Jobless Claims Ease by 7,000 in August 10 Week
- Initial claims 10,000 lower than forecast.
- Continuing claims down 7,000 in August 3 week.
- Insured unemployment rate maintains 1.2% amount.
The chart adequately depicts the economic condition in Japan. Japan’s quarterly GDP jumped to a gain of 3.1% in Q2 2024, but that was from the Q1 decline rate of -2.3%. Together there is marginal growth in the first half of the year.
Japan’s year-on-year growth rate shows the impact of these quarterly gyrations as the 3.1% annualized Q1 gain was not enough to boost year-on-year GDP growth to positive territory. Japan’s GDP continues on a declining year-over-year path.
Growth trends Japan’s quarter GDP series became exceptionally bumpy in and nearly trendless from 2021 on in the wake of the Covid disruption. GDP growth was positive with quarterly growth rates spiking as high as 4% and 5% but after Q1 2003 quarterly growth lost its zest; two of the past five quarterly growth rates have been negative. One has been about one quarter of one percentage point, with two other quarters in the 2.5% to 3% growth range. This pattern has produced a decaying year-on-year GDP growth rate pattern.
Quarterly growth Japan’s second quarter of 2004 produced a sharp reversal of weak private spending that fell 2.2% (annualized) in Q1 then rebounded at a 4% annual rate in Q2. However, there also has been four straight quarters of real private spending declines through Q1 2024. Public spending stepped back to gain just 0.3% annualized in Q2 after growing by 1.1% in Q1.
Spending on capital formation has been erratic. It fell at a 3.5% pace in Q1 then surged back at a 6.9% growth rate in Q2. However, recently in Q1 2023, the quarterly capital spending has been as strong as 9.0%. Still, in three of the last six quarters, there have been declines. Plant and equipment spending has evolved similarly. Housing spending rose at a sharp 6.7% annual rate in Q2 following a 10.1% annual rate drop in Q1 that was part of an ongoing three-quarter decline.
On the trade front, the balance of trade has been through some substantial gyrations, including two surpluses in the last six quarters. Exports rose by a solid 5.9% annualized in Q2 but only after a drop in Q1 at a 17.2% pace. Similarly imports rose at a pace of 7.1% compared to a Q1 drop at a 9.6% annual rate.
Domestic demand rose at a 3.5% annual rate in Q2 snapping a four-quarter declining streak.
Annual trends Year-on-year GDP growth has been fairly steadily slowing and has posted declines in each of the last two quarters. Private spending has been negative for four quarters running, but the weakness was trimmed in Q2. Public consumption rose year-on-year in Q2, and that was the first net gain in six quarters.
Gross fixed capital formation has been slow and slowing. Plant and equipment spending has been erratic around small gains and losses year-on-year. Housing spending has contracted year-on-year for the last three quarters.
The annual GDP net exports result has been a positive balance in four of the last five quarters but in Q2 that four-quarter change has turned negative. Exports have logged low positive growth until this quarter when the year-on-year growth rate posted at -0.2%. Imports have been declining over the previous four quarters but logged growth of 2.5% in Q2 2024 to break that string.
Domestic demand has been shrinking year-on-year for four quarters in a row. The tendency, however, has diminished; it produced a small 0.1% contraction in Q2.
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