According to a report from the Wall Street Journal, "Data out today show real divergences in fortunes between countries and regions. Although Europe is experiencing disinflation, there’s strong growth in the U.K.’s consumer demand, and even in Germany. And whereas places like Turkey are in real trouble, Australia is showing signs of emerging from a yearlong slump.
"The question is whether those regions of the world that are in an upswing–especially the U.S.–have enough momentum and are generating enough outside influence to drag the laggards along with them, whether the slowpokes end up holding back the faster ones, or whether we continue to muddle along with a mix of pluses and minuses around the world. It’s probably most likely the latter, with the general shift for 2014 being that singular, monolithic trends in the global economy will be less discernible than in recent years. Each economy’s fortunes will be determined more by its own internal circumstances than those of the global forces".
GERMANY:
–November retail sales rose 1.5% from October against an expected 0.6% monthly rise and following a 0.9% drop in October.
–The December seasonally adjusted unemployment rate was 6.9%, in line with expectations and unchanged from November. December seasonally adjusted jobless claims fell 15,000 and following a rise of 9,000 in November.
–November retail sales rose 1.5% from October against an expected 0.6% monthly rise and following a 0.9% drop in October.
–The December seasonally adjusted unemployment rate was 6.9%, in line with expectations and unchanged from November. December seasonally adjusted jobless claims fell 15,000 and following a rise of 9,000 in November.
After some surprisingly and worryingly weak numbers, German data is looking a bit better. Unemployment claims dropped significantly against expectations of no change, while the overall unemployment rate remained stable. Meanwhile, retail sales showed a big turnaround from two months of declines. Inflation-adjusted sales were up 1.6% on November 2012 while sales on the year to November rose 0.3% from same period a year earlier, boding well for hopes that German domestic demand could finally be picking up. The caveat is that the data are subject to significant revisions and only represent a quarter of private consumption.
U.K.:December new-car sales were up 24% on the year while 2013 new car sales rose 11% from 2012.
Another data point showing the boom in British consumption. Car sales have been very strong, boosted by generous financing schemes and underpinned by low rates. Unfortunately, this sort of growth is exactly the sort that predominated before the financial crisis–debt-driven consumption leading to large current-account deficits.
The worry in the Euro Zone is the drop in inflation.
The November producer price index was down 0.1% on the month and down 0.3% on the year against expectations of down 0.1% and down 1.2%, respectively. The PPI was down 0.5% on the month and down 1.4% on the year in October.
–The December CPIwasup0.8%on the year, below expectations of +0.9% and down from +0.9% in November.
–The December CPIwasup0.8%on the year, below expectations of +0.9% and down from +0.9% in November.
Inflation is running worryingly below the European Central Bank’s not-quite-2% target. The drop in year-on-year CPI will make the ECB’s policymakers squirm about looming deflation, not least because core inflation was just 0.7%. But they might take some relief in the fact that pipeline deflationary pressures in the form of PPI are moderating. They could well look through the current dip in price pressures and point to more positive recent data flows, not least recent manufacturing purchasing managers’ surveys and today’s German numbers. And the fact that the ECB’s own forecasts are for inflation to stay well below target through 2014 means it has set a high bar for forcing action, suggesting it would rather tolerate disinflation at these levels than be forced into some extraordinary stimulus measures such as setting deposit rates in negative territory.
TURKEY: As concerns run high over a crippling political and financial crisis, the Turkish lira is softening again but is still shy of the record lows from it which it bounced on Monday afternoon. This comes as the Turkish government fired 350 police in Ankara as part of a corruption scandal.
AUSTRALIA: Business confidence is rising, according to a survey by Dun & Bradstreet, with more than two thirds of companies growing more optimistic about the economy in 2014, while expectations for sales, employment, selling prices, capital investment and profits have all turned up.
The growing confidence is a sign that the impact of cheap credit is final being felt, months after the Reserve Bank of Australia cut interest rates to a record low of 2.5% last August. Much will depend on China: If the world’s second-largest economy wobbles, Australia’s will too. But for the moment, China retains a healthy appetite for Australian iron ore and coal. Data out Tuesday showed that in the year to November, Australia’s exports to China hit a record A$92 billion, and its trade surplus with China reached a record A$45.6 billion. China absorbed 35.6% of Australia’s exports and accounted for 27.8% of Australia’s total two-way trade, also record highs.
