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Economies of note this week: Soft first QTR for 2013

Written by Sam Coxhead on April 19th, 2013.      0 comments

4:20 PM (NZT)
The Australian economy has been light on news this week. The minutes from the latest RBA monetary policy meeting offered little surprise, re-iterating that they remain poised to ease the cash rate lower from the current 3%, if conditions prove it necessary. Economic news of late has been patchy at best, so with the lower than expected Chinese GDP number early this week, the odds of an easing in the coming months has increased to close to 50% in the interest rate market. The downward revision of global growth estimates for 2013 by the likes of the IMF is not a good sign for the Australian economy. Falling Chinese demand will further pressure the export sector if the Australian dollar remains at elevated levels. Next week will see 1st quarter inflation numbers offer some interest on Thursday. Also the latest Chinese manufacturing numbers will offer some indirect focus on Tuesday.
New Zealand
It has been a relatively quiet week for NZ economic news. The 1st quarter inflation numbers offered some interest, but ultimately were of limited impact. The modest .4% rise in consumer prices was right on market expectations and the annual inflation rate comfortably within the RBNZ expectations. The latest Global Dairy Trade (GDT) auction results saw a modest gain make the 9th straight auction price rise and yet again record levels fetched. Rainfall across the North Island this week should ease slightly the drought impact fears for the coming season. Next week sees the RBNZ monetary policy announcement on Wednesday offer the primary domestic focus. With no change to the 2.5% cash rate expected, the statement will offer the latest insight to RBNZ thinking. Expect the property market and the high level of the NZ dollar to again feature in the statement.
United States
This week has seen further mixed economic news in the US. Inflationary pressures remain anchored. Manufacturing indicators were soft, but housing starts and industrial production numbers relatively stable. The stock markets have remained patchy with direction-less trade, and longer term interest rates have pushed marginally lower on a strange week where the Boston events added to uncertainty. Next week will offer important insight. The latest homes sales, manufacturing and durable goods sales data join the important advanced release for the 1st quarter GDP number on Friday. 
Unsurprisingly it has been another reasonably downbeat week for the European economy. Economic sentiment numbers came in below expectations, and the latest inflation numbers were as expected. Increasing speculation of an ECB easing of the cash rate continues to emerge. This week uncharacteristically saw the German Central Bank head suggesting the ECB would lower rates if data warranted it. The IMF has also been verbally pushing for further such monetary accommodation from the central bank. Next week sees the latest manufacturing and business sentiment numbers offer further insight to the economy that is expected to start to emerge with growth in the latter half of 2013.
United Kingdom
It has been a mixed week for news in the UK. The latest inflation numbers came in on expectation at 2.8%. Unemployment numbers were not great, with the rate lifting from 7.8 to 7.9%. Retail sales activity fell .7% for the month. The BOE monetary policy meeting minutes revealed no change to the voter split on extending the QE program. Three of the nine voters remain in favour of further monetary stimulation, and this will continue to undermine demand for the GBP against the Australian and New Zealand dollars, in the short term at least. Next week sees preliminary GDP data offer the dominant focus, and they are due for release on Thursday.
It has been an interesting week for the Canadian economy. The latest manufacturing numbers were stronger than expected, with a 2.6% increase in activity. The BOC statement accompanying their unchanged cash rate also offered interest. 2013 growth expectations have been lowered from the previous estimate of 2.0%, to 1.5%. Lower levels of global growth leading to the softer domestic growth forecast  However, do not expect easier monetary policy at any stage with the next move still expected to be higher for the cash rate from its emergency low setting, the issue is of course timing of the cash rate increases. Later today the latest inflation numbers are due for release.  Next week sees just Tuesday's monthly retail sales data offer any domestic focus.
This week has seen little in the way of material economic data released. The focus has come from various statements offered by officials. In the run up to this weekend's G20 meetings, political posturing has been rife. BOJ head Kuroda again stated that "global policy makers understand that the recent BOJ actions do not specifically target the value of the YEN". These kinds of comments are somewhat unsurprising, and have been made before. However, these and the wider market risk aversion have seen YEN demand increase in the short term. Next week will see the latest inflation numbers released ahead of the BOJ's monetary policy announcement on Friday.
Topics: Economic news