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

December 12, 2011

Economic Data Vault

December 12th 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

TD-MI Inflation Index

Inflationary pressures continue to abate according to the latest TD-MI inflation index release. The headline index fell by 0.1% in November with the 3 month annualised rate also sitting at -0.1%. The second monthly drop in the last 4 months has seen the annual rate drop from 2.6% to 2.1% which is its lowest level since mid 2010. The trimmed mean also fell over the month dropping 0.2% with the 3 month annualised rate now 0.6% while the annual rate sits at 2.1% at the bottom of the 2-3% target band.

GDP

After a bunch of surprises from the partial indicators, GDP for the third quarter eventually printed at 1% which was ahead of the 0.8% expected with the annual pace of growth lifting to 2.5% courtesy of a 0.2% upward revision to both the Q1 and Q2 outcomes which took them to -0.7% and 1.4%. So the impact of the flooding has been greatly downgraded after the initial hit to GDP was recorded at -1.2%. The biggest driver of growth was private gross fixed capital formation which added 2.1 percentage points

Employment

Total employment fell by 6.3k in November which was more than offset by a 6.7k upward revision to October’s previously reported increase of 10.1k however the full-part time split was a little more concerning with full time jobs falling 39.9k and are now lower than 12 months ago while part time rose by 33.6k. The soft growth was enough to push the unemployment rate slightly higher to 5.3%, despite a small dip in the participation rate, with the unemployment rate developing a clear up trend.

Offshore Data

US Non-Manufacturing ISM

There was an unexpected fall in the non-manufacturing ISM index from 52.9 to 52 after it was expected to rise to 53.9 however it was the composition of the index that was a little more concerning. The employment component provided a large drag after the index dropped sharply from 53.3 to 48.9 and has now been below 50 for two of the past 3 months. The drop in the non-manufacturing index and the continued weakness of the manufacturing index meant that the composite index fell to 52.1, equalling its post crisis low from August 2010

UK Production

While the slowdown in Europe and now China is garnering most of the attention at present, the UK’s economy is also under growing pressure with both industrial and manufacturing production falling in October. Industrial production fell by 0.7% over the month and is now down 1.7% over the past 12 months while manufacturing production, which has help up a little better that industrial production to date, also fell 0.7% and is now down over the past 12 months with the annual rate at -0.7%

German Industrial Production

After falling for two straight months, German industrial production rose a little more than expected in October with an increase of 0.8% against expectations of a 0.3% rise. However it wasn’t enough to prevent a continued slide in the annual rate which is now at 4%, off a recent high of 10.4% in July. The increase was driven by a 2.2% rise in capital goods production while intermediate goods fell 0.4% and consumer goods were unchanged. The breakdown of consumer goods saw durable goods production rise 2.5% while non-durables fell 0.5%

German International Trade

Germany’s trade figures were very disappointing in October with exports falling by 3.6% against expectations of a 1.2% decline while imports dropped by 1% against expectations of a 0.3% rise. While the sharp drop in Exports in october is quite concerning it is the enduring trend in imports which we see as more instructive to outlook for demand. Germany’s imports have stalled over the past 6 months  which can be seen in the chart and they are expected to remain soft given relationship between the Chinese leading index and German trade we have shown previously.

Chinese Inflation

Inflationary pressures in China, like in Australia, continue to ease with the Chinese inflation index showing prices actually fell in November, dropping by 0.2%. The annual pace of inflation dropped sharply to 4.2% from 5.5% the previous month after a 1.1% rise from November 2010 dropped out of the calculation. The annual pace of food inflation also fell sharply, dropping from 11.9% to 8.8% while non-food inflation also softened, sliding from 2.7% to 2.2″%. With outcomes of 0.5%, 1% and 1.2% to drop out over the next three months the annual rate of inflation can be expected to soften further.

Chinese International Trade

After a slowing considerably over the past few months Chinese trade figures firmed in November however the annual pace of both imports and exports slowed from a month earlier. Imports rose 13.4% after falling for the previous two months while the annual pace slowed from 28.7% to 22.1%. Meanwhile exports jumped 10.8% after falling for the three previous months with the annual rate slowing to 13.8%.  Exports to the EU continued to slow with exports to Italy now down 23.3% wover the year while exports to Germany are now also down year on year.

Yours in data – The Lighthouse Team.

greg@lighthousesecurities.com.au

www.twitter.com/gregorymckenna

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