Overnight News Recap: EU Confidence Indicators Sink, Surprise Fall in Japanese IP

News Recap | Written by CEP News | Jul 30 08 10:29 GMT |

(CEP News) - The sharpest decline in euro zone confidence indicators since the Sept. 11, 2001 terrorist attacks, new record highs in Belgium's inflation rate and a sharp contraction in Spanish retail sales for June highlights the European economic news while Japan received a surprise decline in industrial production figures for June. According to the European Commission, business sentiment in the euro zone declined further than expected in July, as reflected by the business climate indicator falling to -0.21 from June's 0.13 level. Economists had expected a less pronounced fall to -0.02. Meanwhile, June's business climate level was revised down from an initial reading of 0.14. The EU Commission also reported stronger-than-expected falls in all of its euro zone confidence indicators for the month. Against expectations of only a one-point decline, euro zone consumer confidence slipped all the way to -20 in July from June's -17 print. The economic confidence level dropped to 89.5 from 94.8, despite consensus calls for a 93.0 reading. The June economic confidence reading was revised down from 94.9. Meanwhile, the euro zone industrial confidence indicator slipped to -8 in July, down from both the -7 level expected and the -5 figure recorded in the previous month, while the services sentiment indicator fell to 1 following June's 9 reading, down from the 8 level expected. On Wednesday, the National Statistics Institute (INE) reported that Spanish retail sales fell 9.8% year-over-year in June, deepening the 5.3% decline observed in the previous month. However, adjusting for calendar effects, the decline was a less severe 7.9%. On Wednesday, the National Institute of Statistics (ISTAT) reported that Italian producer price inflation slowed somewhat to 0.8% on a monthly basis in June, in line with expectations and down from the 1.5% growth rate observed in May. In annualized terms, the Italian producer price index increased 8.2%, also as expected, up from the previous month's 7.5% rise. According to Statistics Belgium, inflation reached a record high 5.91% in July compared to one year ago. June's annualized price increase had been recorded at 5.8%. Belgium's yearly inflation rate is among the highest in the euro zone, second only to that of Slovenia. Conversely, the Belgian consumer price index growth rate slowed in monthly terms to 0.53% in July from June's 0.56% rate. According to data released by the Statistical Office of the Republic of Slovenia, retail trade in the country rose 1.8% month-over-month in June, up from the 0.2% gain recorded in May. On a yearly basis, retail trade increased 6.7% following the 6.0% jump recorded in the previous month. In response to French President Nicholas Sarkozy's proposed plan to make the European Central Bank more accountable politically, as reported in the Financial Times on July 21, ECB Executive Board member Lorenzo Bini Smaghi wrote a letter in the Italian newspaper Il Sole 24 Ore in which he stressed that the central bank already delivered more detailed information regarding its interest rate policy decisions than its counterparts. A preliminary look at Japanese industrial production showed a 2.0% month-over-month decline in June compared to forecasts for a 1.7% pullback and a 2.8% growth rate in May. The report also suggests that annual production rose 0.2%, also below the consensus for a 0.6% gain and previous 1.1% increase. Authorities also reported Japanese vehicle production posted an annual 4.5% rate of expansion in June compared to May's 6.8% increase. The Shoko Chukin Bank's small business confidence index for Japan declined to 39.9 in July from 40.7 in June. In Australia, building approvals contracted 0.7% month-over-month in June despite forecasts for a 1.0% increase. The previous month's 6.5% decline was revised down to a 7.2% fall. Meanwhile, annual building approvals fell 7.8% compared to forecasts for a 4.1% decline and the previous month's 0.2% expansion was revised down to a 0.4% contraction. On Tuesday evening, the U.S. Securities and Exchange Commission extended its emergency rule limiting short selling to Aug. 12. The rule requires short sellers to pre-borrow their share prior to enacting the transaction, and was setup in order to limit the damage when GSEs Fannie Mae and Freddie Mac came under pressure several weeks ago. JP Industrial Production (M/M) June Preliminary -2.0% vs. Exp: -1.7% Prior: +2.8% JP Industrial Production (Y/Y) June Preliminary +0.2% vs. Exp: +0.6% Prior: +1.1% AU Building Approvals (M/M) June -0.7% vs. Exp: +1.0% Revised: -7.2% Prior: -6.5% AU Building Approvals (Y/Y) June -7.8% vs. Exp: -4.1% Revised: -0.4% Prior: +0.2% JP Vehicle Production (Y/Y) June +4.5% vs. Prior: +6.8% JP Small Business Confidence July +39.9 vs. Prior: +40.7 IT PPI (M/M) June +0.8% vs. Exp: +0.8% Prior: +1.5% IT PPI (Y/Y) June +8.2% vs. Exp: +8.2% Prior: +7.5% EU Euro-Zone Business Climate Indicator July -0.21 vs. Exp: -0.02 Revised: +0.13 Prior: +0.14 EU Euro-Zone Consumer Confidence Jul -20 vs. Exp: -18 Prior: -17 EU Euro-Zone Economic Confidence July +89.5 vs. Exp: +93.0 Revised: +94.8 Prior:+ 94.9 EU Euro-Zone Industrial Confidence July -8 vs. Exp: -7 Prior: -5 EU Euro-Zone Services Confidence July +1 vs. Exp: +8 Prior: +9 By Erik Kevin Franco, efranco@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it and Todd Wailoo, twailoo@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it , edited by Nancy Girgis, ngirgis@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it CEP Newswires - CEP News © 2008. 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