Overnight News Recap: Italian GDP Weakens; USD Surges Against Majors

News Recap | Written by CEP News | Aug 08 08 10:26 GMT |

(CEP News) - A weaker-than-expected GDP report from Italy, the European Central Bank's credit lending survey and comments from Dutch Central Banker Nout Wellink were the highlights of the European in the absence of no major macroeconomic data from the UK. Meanwhile, the USD is much strong against majors with crude oil taking another plunge on Friday morning. The Italian economy saw no growth in the second quarter of 2008 year-over-year, despite expectations of a 0.3% rise, according to preliminary estimates from the National Institute of Statistics (ISTAT). Q1 had seen a growth rate of 0.3%. In quarterly terms, the economy contracted by 0.3% following Q1's 0.5% gain. Economists, however, had expected a flat reading for the period. The European Central Bank released the results of its July bank lending survey and noted a lower net tightening of credit standards for loans to enterprises in the second quarter compared to the first. The survey also noted that the most important factor regarding the tightening of credit continued to be the growing pessimism regarding the economic outlook. The respondents of the ECB survey also reported that net tightening of household loans for house purchases was also diminishing. However, it was noted that the standards for consumer credit and household borrowing for other purposes was tightening further. In an interview with Dutch broadcast channel RTL Z on Friday, European Central Bank Governing Council member Nout Wellink noted that food and energy prices were rising sharply and stressed that the ECB is very concerned about accelerating inflation in Europe. He also conceded that the council broadly agreed to leave the main refinancing rate unchanged at 4.25% during its meeting on August 7. In the aftermath of what many called a dovish press conference from European Central Bank President Jean-Claude Trichet on Thursday, the euro has lost nearly two cents on the session, trading a low as 1.5113 USD. Meanwhile, the Canadian dollar is also weaker against the USD at 0.9448, just ahead of the employment report, and crude oil is down over two dollars, trading at just above $118 per barrel. According to the Central Statistics Office (CSO), Irish industrial output rose 6.2% year-over-year in June following the 9.7% gain in May, which was revised up from +9.3%. On a monthly basis, output slipped 5.3%, down notably from the 13.8% jump seen in the previous period. May's increase had been revised up from an initial figure of +13.3%. A report released by the State Secretariat for Economic Affairs on Friday indicates the Swiss unemployment rate remained unchanged at 2.3% in July as expected. In numerical terms, 92,163 individuals who consider Switzerland to be their primary place of residence are currently actively searching for work, up slightly from June's 91,477 figure. In seasonally adjusted terms, the unemployment rate came in at 2.5%, reflecting 99,819 persons actively looking for employment, also unchanged from the previous month's rate and in line with the consensus. The French Ministry of Economy, Finance and Industry reported that the central government deficit contracted to €32.8 billion in June from May's €50.1 billion level. Disaggregating the data, the general budget balance showed a deficit of €17.3 billion in the year-to-date for June, reflected in expenditures coming in at €138.13 billion and revenues at €120.5 billion. According to data released by National Board of Customs, the Finnish trade balance rose to a surplus of €720 million in June, up from the €365 million recorded in the previous month. Disaggregating the data, the customs board noted that Finland's trade surplus within the euro zone increased substantially to €160 million in the month from May's €5 million level, while trade outside the monetary union rose to €275 million from €135 million in May. On Friday, the Statistical Office of the Slovak Republic reported that industrial production rose 6.2% in June 2008 compared to the same month one year ago, up from May's 3.3% annualized rate, but down from the 7.3% gain expected. Meanwhile, May's figure was revised down from an initial reading of 4.0%. According to the Statistical Office of the Republic of Slovenia (SORS), industrial production in the country rose 1.9% on a yearly basis in June, up from May's 1.2% growth rate. In monthly terms, industrial output rebounded and grew 2.5%, overshadowing the 1.5% decline seen in May. The Statistical Office of the Republic of Slovenia (SORS) reported that the external trade deficit contracted to €234 million in June from the previous month's €323 million level. Meanwhile, May's reading was revised up from an initial deficit figure of €307 million. On Friday, Statistics Netherlands reported that Dutch industrial output rose 1.2% in June on an annualized basis, unchanged from the previous month's growth rate. Meanwhile, May's increase was revised up from an initial reading of +0.6%. On a monthly basis, industrial production in the Netherlands rebounded strongly and rose 0.8% in June following May's 0.5% fall, which was revised up from -0.7%. In Australian dollar terms, the country's foreign reserve holdings increased to A$37.4 billion in July versus the A$35.9 billion reported in June, according to a report from the Reserve Bank of Australia on Friday. According to a report from the Bank of Japan on Friday, new loans made to individuals for the purchase of a home declined 21.9% quarter-over-quarter in Q2 compared to a 29.3% increase previously, while annualized loans advanced 8.5% compared to the previous quarter's 1.6% contraction. Meanwhile, outstanding loans for housing expanded 3.9% on the year. The Bank of Japan also reported an annual increase of 1.8% of bank lending including trusts for July, short of expectations for a 2.0% increase and June's 1.8% rise. Excluding trusts, lending advanced 2.0% on the year, matching the previous month's gain, and adjusted bank lending rose 2.5%, in line with forecasts and above the previous month's 2.4% gain. According to Tokyo Shoko Research, the number of bankruptcy cases in July rose an annual 12.9% in July compared to the 11.7% reading reported in June. The Japanese Eco-Watchers current conditions index for Japan declined to 29.3 in July, above expectations for a 28.9. In June, the index was 29.5. Meanwhile, the outlook fell to 30.8 compared to June's 32.1 level. JP Loans Individual Hfund (Y/Y) Q2 +3.9% vs. Revised: +3.6% Prior: +3.7% JP Japan Money Stock M3 (Y/Y) July +0.8% vs. Exp: +1.0% Prior: +0.9% JP Japan Money Stock M2 (Y/Y) July +2.1% vs. Exp: +2.4% Revised: +2.2% Prior: +2.3% JP Bank Lending including Trusts(Y/Y) July +1.8% vs. Exp: +2.0% Prior: +1.8% JP Bank Lending Banks ex-Trust (Y/Y) +2.0% vs. Prior: +2.0% JP Bank Lending Banks Adjust (Y/Y) July +2.5% vs. Exp:+2.5% Prior: +2.4% JP Bankruptcies (Y/Y) July +12.9% vs. Prior: +11.7% JP Eco Watchers Survey: Current July 29.3 vs. Exp: 28.9 Prior: 29.5 JP Eco Watchers Survey: Outlook July 30.8 vs. Prior: 32.1 AU Foreign Reserves July A$37.4B vs. Prior: A$35.9B FR Central Govt. Balance June Prior: -€50.1B IT GDP (Q/Q) (SA WDA) Q2 Preliminary Exp: 0.0% Prior: +0.5% IT GDP (Y/Y) (SA WDA) Q2 Preliminary Exp: +0.3% Prior: +0.3% By Erik Kevin Franco, efranco@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it and By 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. All Rights Reserved. www.economicnews.ca The Copying, Broadcast, Republication or Redistribution of CEP News Content is Expressly Prohibited Without the Prior Written Consent of CEP News. A copy of CEP News disclaimer can be found at http://www.economicnews.ca/cepnews/wire/disclaimer.