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Eurozone October industrial production -0.5% vs -0.5% m/m expected

  
Analysis, Economy

Latest data released by Eurostat – 12 December 2019

  • Prior +0.1%; revised to -0.1%
  • Industrial production WDA -2.2% vs -2.4% y/y expected
  • Prior -1.7%; revised to -1.8%
Factory activity is seen slumping to start Q4 and that largely mirrors the weaker sentiment seen in the German industrial sector as well. This just reaffirms the added sluggishness in the manufacturing side of things in the euro area economy towards the end of the year.

Japan – Core Machinery Orders for October: -6.0% m/m (expected 0.5%)

  
Analysis, Economy

Machine order data is sued as a heads up to business investment (capex) in the months ahead.

-6.0% m/m

  • expected 0.5%, prior -2.9%

-6.1% y/y

  • expected -1.9%, prior 5.1%
Ugly numbers.
  • The Japanese government says it has cut its assessment of machinery orders.
  • Adds that machinery orders are showing signs of stalling
Well, d’uh.
while the BOJ is focused on its inflation goal data like this will not go unnoticed. The bank next meet on December 18 and 19.

China will do whatever it takes to boost economic growth into 2021 – here’s why

  
Analysis, Economy

Its a symbolic thing. 2021 is going to be the 100th anniversary of the Chinese Communist Party.

Here’s Stan Chart on what to expect from China in 2020 and into 2021:
  • government is unlikely to drop the target of doubling 2010 GDP by 2020
  • This requires minimum growth of 6.1-6.2% in 2019-20
  • The government has pledged counter-cyclical policies to offset the headwinds. We estimate that higher US tariffs will reduce China’s 2020 growth by 0.3ppt with the achievement of a ‘phase one’ trade deal and by 0.6ppt in a ‘worse-case’ scenario
  • The broadly defined budget deficit is likely to remain at around 6.5% of GDP
  • mix of fiscal stimulus shifting from tax cuts to spending
  • PBoC may keep credit growth slightly above nominal GDP growth, cutting the reserve requirement ratio (RRR) and de facto policy rates
  • “The switch to re-leveraging in 2019 from deleveraging in 2018 may turn out to be a key support for 2020 growth. In addition, we expect infrastructure investment to edge higher on fiscal stimulus; the industrial inventory cycle to bottom out; car sales to be less of a drag; and last but not least, a positive leap-year effect.”
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Despite the negative effects of the trade war China has plenty of levers to opull, and they will. Not all bad news ahead of China-proxy trade.
Its a symbolic thing. 2021 is going to be the 100th anniversary of the Chinese Communist Party. 

Asian Development Bank (ADB) cuts its growth forecast for China

  
Analysis, Economy

ADB has cut its GDP forecasts for developing Asia this year and the next

Citing a weaker outlook for China and India, and thus  indicated softer economic activity elsewhere in the region.
  • developing Asia forecast to 5.2% in 2019 and 2020, (from 5.4% and 5.5% previously)
China this year and the next lowered to 6.1% and 5.8%
  •  from 6.2% and 6.0% forecasts in September
  • Citing trade war impact on China and higher prices of pork cutting into consumer

Japan GDP, final for Q3: 0.4% q/q

  
Analysis, Economy
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Third quarter economic growth in Japan, this the final (link to the preliminary is below)

  • GDP sa q/q  0.4%, ahead of the preliminary result.
  • GDP annualised sa 1.8%
  • GDP nominal q/q 0.6%
  • GDP deflator (an inflation indication)
  • Private consumption 0.5% q/q
  • Business spending 1.8% q/q
For the preliminary readings and those for Q2, here is the report:
  • Japan GDP (preliminary) for Q3 0.1% q/q (vs. expected 0.2%)
The growth figures are well ahead of the preliminary release. A relatively string report. Some of the strength in consumer activity will be ‘front loading’ ahead of the sales tax hike that came on October 1 I guess (although this did not show up to much extent in other data).

Eurozone Q3 final GDP +0.2% vs +0.2% q/q second reading

  
Analysis, Economy

Latest data released by Eurostat – 5 December 2019

  • Q3 final GDP +1.2% vs +1.2% y/y second reading
The secondary reading can be found here. No changes to the previous estimate, as such this just reaffirms more sluggish growth seen in the euro area during the third quarter.
Household consumption was a minor bonus but growth is largely marred down by trade. EUR/USD stays a little more bid on the session at 1.1091 but is still unable to firmly break above the 1.1000 handle for now.
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