Data Vault – A weekly wrap up of key economic releases in Australia and beyond

October 22, 2011

Economic Data Vault

October 22nd 2011

Welcome to our weekly Data Vault. The Vault is put together by one of our team here at Lighthouse and edited by me – we offer it as a resource to readers and clients who want to quickly get a feel for the data over the week without having to read a full blog or economic report. It will be released each Monday morning and while our primary focus is Australia we also include our key overseas indicators.

Australian Data

Motor Vehicle Sales

Motor vehicle sales were a little softer in September dropping 1.5%, following their recent bounce back following the supply disruptions courtesy of the Japanese natural disasters which resulted in a gain of nearly 15% over the past three months. The drop in September was largely a result of a 5.6% fall in the sale of SUV’s while the 0.9% fall in passenger vehicle sales was largely offset by a 2.3% rise in the sale of ‘other’ vehicles. By state NSW and Victoria suffered the biggest declines while South Australia was the only state to post a material gain.

Westpac Leading Index

The Westpac leading index rose for the 6th straight month, climbing 0.8% in August while the 0.5% gain from July was revised up to 0.6%. The annual pace of the index climbed from a revised 3.5% to 4.5% with three of the four monthly components including the real money supply (1.1%), dwelling approvals (11.4%) and US industrial production (0.2%) rising over the month while the all ordinaries index fell 2.9%. More importantly for GDP, given its closer correlation,  the annual pace of the coincident index remains subdued at 0.3%

NAB Quarterly Business Survey

The more detailed NAB Quarterly business survey saw business confidence and conditions slide further in the third quarter. Conditions deteriorated across industries and across states while the gap between weak and strong industries reached its largest in history. Trading, profitability and employment were all hit while the exports index remained at negative for the 13th straight quarter. The confidence index fell to -4 while the capital expenditure index fell from 29 to 21 on growing uncertainty in the economic outlook.

Import – Export Prices

Australia’s terms of trade jumped futher in the 3rd quarter after export prices rose 4% over the quarter against expectations of a 3.6% rise while import prices were unchanged after they were expected to rise 0.5%. The main drivers behind the rise in export prices was a 9.3% rise in coal prices while natural gas exports were up 24.5%. The sharp pull back in commodity prices in October, especially the price of iron ore, should it be sustained, will provide a drag on the terms of trade in the 4th quarter.

Offshore Data

US Empire Manufacturing Index

Manufacturing activity in the New York region continue to decline according to the October Empire Manufacturing index which was little changed at -8.48 from -8.82 a month earlier. The index has now been negative for 5 straight months while the General Business Condition Index 6 months ahead is now at its 3rd lowest level since the series began, at 6.74. The only lower readings were in February 2009 when the index hit 5.75 and directly following the September 11 Terrorist attacks when the index fell to -22.95 only to bounce back the following month.

US Industrial Production

Industrial production across the US rose 0.2% in September which was in line with market estimates however the 0.2% increase in August was revised down to be unchanged from July. By sector, manufacturing production which accounts for three quarters of all production rose 0.4% which utilities (12%) fell 1.8% and mining production (13%) rose 0.8%. Be market group the production of final products (55%) rose 0.4% while Materials production (45%) was only up 0.1% over the month.

US Inflation

Inflationary pressures remained elevated in September with headline inflation up 0.3% which was in line with expectations with the annual pace climbing to 3.9% while the core reading was up 0.1% which was just below the 0.2% expected leaving the annual rate unchanged at 2.0%. The increase in producer prices was a little more robust with headline prices up 0.8% which was four times estimates, lifting the annual rate to 6.9% while the core reading rose 0.2%, twice estimates however the annual rate was unchanged at 2.5%

US Housing Starts and Building Permits

The monthly swings in housing starts and building permits remain volatile but ultimately continue to gyrate around their record lows in September. Housing starts jumped 15%, ahead of estimates of a 3.3% gain to an annual pace of 658k after they fell by a negatively revised 7% the previous month. Meanwhile Building permits dropped 5% which was a little more than twice estimates to an annual pace of 594k after the rose by an upwardly  revised 4% the previous month

US Philadelphia Fed Manufacturing index

The Philly Fed general business conditions surge the most in a number of decades in October with the index jumping from -17.5 to 8.7 which as well ahead of market estimates of an improvement to -9.4 and up from its August low of -30.7. The Philly fed readings continue to be volatile after the index went from -5.6 in August last year to be at 43.4 7 months later to then fall to -30.7 5 months after that. The latest improvement was driven by an increase in the new orders index which rose from -11.3 to 7.8 while the number of employees index fell from 5.8 to 1.4.

US Existing Home sales

The annual pace of new home sales dropped to 4.91m in line with expectations however the percentage drop was a little larger than expected after last month’s annual pace  was revised up from 5.03m to 5.06m. Sales of single family homes were down 3.6% while the sales of units were up 1.8%.  By region sales across the Northeast rose 2.6% while the four remaining regions all registered declined with the Midwest down 0.9%, the South down 2.6% while sales in the West slumped 8.8%.

Eurozone ZEW economic sentiment index

The latest ZEW centre for economic research survey showed that the outlook for economic growth across the Eurozone continues to deteriorate. The European index fell from -44.6 to -51.2 and is now only a little more than 10 points away from its GFC induced low while the German, French and Italian induced all posted similar declines. When graphed over the annual rate of growth for the Eurozone since the inception of the common currency, it does not look good for Eurozone growth for the quarters ahead.

UK Inflation

Inflationary pressures remained elevated in the UK in September with the consumer price index rising by 0.6% for the second straight month against expectations of a 0.4% rise while the retail price index jumped 0.8% against expectations of a 0.5% rise. The annual increase in consumer prices rose to 5.2% the equal fastest pace over the last decade, the time it was as high was September 2008, just before the GFC got into full swing while the retail price index annual rate has accelerated to 5.6% its fastest pace since the early 1990’s.

Chinese GDP

The Chinese economy grew at its slowest pace in 2 years according to the latest data release with the economy growing at an annual pace of 9.1% against expectations of 9.3% which was down from 9.5% in Q2 and well below its post crisis high of 11.9% and pre crisis high of 14%. By industry, the annual pace of growth in the primary sector accelerated from 3.2% to 3.8% whiles growth in the secondary sector slowed from 11% to 10.8% and the Tertiary sector slowed from 9.2% to 9%. The data suggests Chinese officials are having some success in slowing the economy to rein in inflationary pressures.

Yours in data – The Lighthouse Team.

greg@lighthousesecurities.com.au

www.twitter.com/gregorymckenna

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