Overnight News Recap: Inline UK GDP , EU M3 Slows, Japanese CPI Jumps

News Recap | Written by CEP News | Jul 25 08 10:40 GMT |

(CEP News) - Inline, albeit concerning, GDP figures for the UK, slowing M3 money supply in the euro zone, declining retail confidence in Italy and comments from Austrian Central Banker Klaus Liebscher were some of the highlights of the European economic session as Japan's CPI report showed some sharp increases in prices. According to advanced estimates from the Office for National Statistics (ONS), the UK economy grew 1.6% year-over-year as expected in the second quarter of 2008, down from the 2.3% growth rate seen in the previous quarter. In quarterly terms, UK GDP increased 0.2%, also in line with expectations, after rising 0.3% in Q1. Breaking down the figures, total services industries, and government and other services both grew 0.4% in Q2 on a quarterly basis, while transportation and communication rose 2.2%. On the other hand, electricity, gas and water supply slipped 1.5% quarter-over-quarter and construction output sank 0.7% over the same period. On Friday, the European Central Bank reported that the euro zone M3 money supply growth rate decelerated to 9.5% in June 2008 compared to the same month one year ago. Economists had expected a rise to 10.3% after M3 had growth 10.0% in the previous month. May's figure was revised down from an initial reading of 10.5%. The ECB also announced that the three-month average M3 growth rate surprised to the downside, growing only 9.9% in the period from April to June. Economists had expected a growth rate of 10.4%, up from the 10.1% increase recorded in the period from March to May. The previous period's increase was revised down from an initially reported 10.4%. According to the Institute for Studies and Economic Analyses (ISAE), retailers' confidence dipped to 98.4 in July after rising to 107.0 in the previous month. Meanwhile, June's reading was revised down from an initial figure of 107.3. July's figure is the lowest recorded since May 2005. The sentiment indicator saw the strongest declines in current sales, falling to -13 in July from -1, and sales outlook, which slipped to 9 from 24. ISAE also reported a fall in the Italian services sentiment in July. According to survey results, the services confidence indicator dropped all the way to -8 in July from 14 in June. On Friday, Statistik Austria reported that industrial output recovered from April's 0.5% fall and rose 1.2% month-over-month in May. The largest contributors to the increase in production came from capital goods output, which rose 2.3% from April to May, and construction output, which saw a gain of 1.9% in monthly terms. In annualized terms, Austrian industrial production increased 5.4%, up from the 3.0% gain seen in April. German import prices rose 8.9% year-over-year in June, the strongest rate since November 2000, according to data released by the Federal Statistics Office (Destatis). Economists had expected an increase of 8.4%, up from May's 7.9% rise. Month-over-month, German import price inflation cooled somewhat to 1.5%, down from the 2.4% rate observed in the previous month. However, the consensus had called for an even greater deceleration to 1.0%. In an interview from his office in Vienna, Austria on July 24, European Central Bank Governing Council member Klaus Liebscher said that he was not surprised by the recent data pointing to deteriorating activity levels in the euro zone and stressed that the ECB still has room to maneuver regarding interest rates. "We expected a weaker second and maybe third quarter," he said. Despite expecting weak activity numbers, Liebscher did concede that the central bank may have to revise down its growth forecasts "by one or the other tenth of a percentage point." According to Statistics Iceland, the inflation rate reached 13.6% in July year-over-year, up from both the 13.2% expected and the 12.7% rate observed in June. On a monthly basis, price growth in Iceland came in at 0.9%, unchanged from June's print. However, Economists had expected a deceleration in the growth rate to 0.6% for the month. On Friday, Statistics Sweden reported that loans to households grew 10.6% in June, down from May's 10.8% rate, as well as from the 11.8% rise observed in June 2007. The Swedish trade surplus fell to SEK 8.2 billion in June from May's SEK 10.0 billion level, according to data released by Statistics Sweden. According to data released by the Japanese Ministry of Internal Affairs and Communications on Friday, inflation in Japan rose slightly faster than expected in June, but nevertheless sharply from the previous month, with headline CPI rising 2.0% year-over-year in June, just higher than estimates for a 1.9% increase and above May's 1.3% gain. CPI excluding fresh food rose 1.9% year-over-year in June, in line with estimates and higher than the previous month's 1.5% increase. Consumer prices excluding fresh food and energy fell 0.1% year-over-year compared to forecasts for no growth and May's 0.1% annual decline. The report also said prices in Tokyo grew 1.6% year-over-year in July, compared to June's 1.5% gain but below forecasts for a 1.8% increase. Excluding fresh foods, CPI was up 1.6%, in line with expectations and higher than the previous month's 1.3% gain. Tokyo CPI excluding fresh foods and energy advanced 0.3% against calls for a 0.4% annual growth rate and the 0.3% rise seen in June. Japanese corporate services price index advanced 1.2% year-over-year in June compared to forecasts for a 0.7% increase and May's 0.7% advance was revised down to a gain of 0.6%. The foreign purchase of Japanese stocks fell ¥297.2 billion in the week ending July 18 after selling off ¥242.3 billion in the previous week. Buying of bonds advanced ¥333.5 billion following the previous week's ¥527.6 billion buy-up. Meanwhile, the Japanese bought ¥71.1 billion in foreign stocks following the ¥13.1 billion purchased in the prior week. The Japanese also purchased ¥172.3 billion in foreign bonds following the previous week's ¥59.5 billion sell-off. JP Tokyo CPI (Y/Y) July +1.6% vs. Exp: +1.8% Prior: +1.5% JP Tokyo CPI Ex-Fresh Food (Y/Y) July +1.6% vs. Exp: +1.6% Prior: +1.3% JP Tokyo CPI Ex Food, Energy (Y/Y) July +0.3% vs. Exp: +0.4% Prior: +0.3% JP National CPI (Y/Y) June +2.0% vs. Exp: +1.9% Prior: +1.3% JP National CPI Ex-Fresh Food (Y/Y) June +1.9% vs. Exp: +1.9% Prior: +1.5% JP National CPI Ex Food, Energy (Y/Y) June +0.1% vs. Exp: 0.0% Prior: -0.1% JP Foreign Buying Japan Bonds W/E July 18 +¥333.5B vs. Revised: +¥527.6B Prior: +¥528.2B JP Foreign Buying Japan Stocks W/E July 18 -¥297.2B vs. Revised: -¥242.3B Prior: -¥242.4B JP Japan Buying Foreign Stocks W/E July 18 +¥71.1B vs. Revised: +¥13.1B Prior: +¥12.9B JP Japan Buying Foreign Bonds W/E July 18 +¥172.3B vs. Revised: -¥59.5B Prior: -¥58.4B JP Corporate Services Price (Y/Y) June +1.2% vs. Exp: +0.7% Revised: +0.7% Prior: +0.6% DE Import Price Index (M/M) June +1.5% vs. Exp: +1.0% Prior: +2.4% DE Import Price Index (Y/Y) June +8.9% vs. Exp: +8.4% Prior: +7.9% IT Retailers' Confidence General July 98.4 vs. Revised: 107.0 Prior: 107.3 IT Services Survey July -8 vs. Prior: 14 EU Euro-Zone M3 (Y/Y) (SA) June +9.5% vs. Exp: +10.3% Revised: +10.0% Prior: +10.5% EU Euro-Zone M3 3 month average (SA) June +9.9% vs. Exp: +10.4% Revised: +10.1% Prior: +10.4% GB GDP (Q/Q) Q2 Advance +0.2% vs. Exp: +0.2% Prior: +0.3% GB GDP (Y/Y) Q2 Advance +1.6% vs. Exp: +1.6% Prior: +2.3% GB Index of Services (3month/3month) May +0.4% vs. Exp: +0.4% Prior: +0.3% By Erik Kevin Franco 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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