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European & Asian Economic Data


European & Asian Economic Data

 The second half of 2013 begins with overnight economic data releases from Asia and Europe. I suspect for much of this month the term “data dependent” will be used quite frequently to gauge central bank monetary policy. The overnight figures, summarized below, suggest three conditions:

  1. Europe is once again “investable” as it attempts to recover from its most recent recession
  2. Policy measures in Japan are having a catalytic effect, as evidenced by the economic data
  3. China remains absent as a 2013 contributor to accelerating global growth

Let’s take a look at the data released in the early hours of July 1….

Japan’s quarterly Tankan Manufacturing Survey (Figure 1.1) reports at +4, the first positive report in six quarters, since September 2011. The positive reading represents confidence by the Japanese manufacturing sector in the hyper easy policy efforts of both Prime Minister Shinzo Abe and Bank of Japan Governor Haruhiko Kuroda. 

European Manufacturing Indices (Figure 1.2) this month provided evidence once again that the contraction of the last two years has ended. Overall eurozone manufacturing reported at 48.8, ahead of last month’s 48.7. Italy reported 49.1, well ahead of last month’s 47.3. Germany scored 48.6, a slight downtick from last month’s 48.7. Manufacturing in the United Kingdom (Figure 1.3) surged to 52.5 from 51.3 last month.

  • This Thursday, while the United States celebrates the Fourth of July holiday, the Bank of England (BOE) and its new chair Mark Carney will remain committed to the 375 billion pound bond purchasing program of the past year, which is having a positive impact on the domestic economy.
  • Also this Thursday, the European Central Bank (ECB) will maintain its aggressive easy monetary policy efforts, which are beginning to take hold. Eurozone inflation (Figure 1.4) reported today an annual basis advance from 1.4% to 1.6%, the second consecutive positive reading. The ECB policy efforts are attempting to create modest inflation back toward its 2% target.

China’s June PMI Manufacturing (Figure 1.5) fell to 50.1 from 50.8 last month, further evidence that GDP is tracking below the government’s 7.5% target.

South Korea’s won began the month of July with its largest gain in nearly five months after encouraging overnight economic news. The gap between exports and imports stands at $5.52 billion last month, well ahead of the $2.9 billion average of the past three years.  In the soon-to-be-released Q3 Playbook, I identify South Korea as one of the first emerging market economies to find its 2013 trough and become investable once again.

Figure 1.1 Japan Tankan Quarterly Manufacturing Survey, 2011 to Present

Source: Bloomberg

Figure 1.2 Overall European Manufacturing Index, March 2011 to Present

Source: Bloomberg

Figure 1.3 United Kingdom Manufacturing Index, March 2011 to Present

Source: Bloomberg

Figure 1.4 Eurozone Inflation, March 2011 to Present

Source: Bloomberg

Figure 1.5 China PMI Manufacturing, March 2011 to Present

Source: Bloomberg

Past performance is not a guarantee of future results.

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