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Its been an interesting week in our economies of note

Written by Sam Coxhead on February 17th, 2012.      0 comments

5:20 PM (NZT)
The Australian Economy:
This week’s focus for the Australian economy has been the employment numbers. These showed surprising jobs growth, especially in the part time sector. The Unemployment rate dropped from 5.2% to 5.1% and 30,000 more jobs were created than expected. This number will likely mean the Reserve Bank of Australia (RBA) are unlikely to cut the cash rate at their next meeting, and will likely be on hold for some time to come. Next week sees the release of the minutes from last week’s RBA monetary policy meeting. Given their surprise decision to hold the cash rate steady, the makeup of the minutes will be closely reviewed. The Chinese HSBC Manufacturing PMI numbers on Wednesday will also be closely watched, because of Chinas influence on Australia’s export sector.
The US Economy:
In the US the economic climate continues to improve, in a continuation of the trend we have seen since 4th quarter 2011. Ironically, the labour market is leading the way this week, with further falls in the numbers of filing for weekly jobless claims. Mortgage delinquencies also fell and the manufacturing numbers beat the market expectations. The release of the FED monetary policy meeting minutes reveal that not all board members are as particularly downbeat as Chairman Bernanke and his comments in speeches made last week. This has seen the easing back of expectations of further quantitative easing (QE) from the FED. This has helped the US dollar halt its 2012 decline. Inflation numbers are due tonight and are not expected to cause too much reaction. Next week sees the main focus on existing and new home sales numbers on Thursday and Friday respectively.
The UK Economy:
UK inflation numbers this week reveal inflationary pressure is finally starting to fall, and is expected to be around 2% by the end of 2012. The Unemployment rate was as expected at 8.4%. Retail sales numbers are due this evening. It would appear the likelihood of further quantitative easing (QE) from the Bank of England (BOE) has reduced. Next week’s BOE monetary meeting minutes on Wednesday, will reveal how the board vote was split on last week’s decision to increase the QE program by 50 billion GBP. Final GDP numbers next Friday, will provide the other focus in the coming week.
The New Zealand Economy:
This week’s focus was the retail sales numbers for the 4th quarter 2011, that were released on Wednesday. These numbers were undeniably strong and caught the market by surprise. The expectation for the core number was 1.1% growth. The actual number was a record for Q4, since the series began in 1995, and was growth of 2.9%. The details showed the positive growth was across the board. Next week is reasonably light for NZ top tier economic data. The RBNZ run Inflation Expectations survey will be released on Tuesday and will be of interest. On Wednesday the Chinese HSBC Manufacturing PMI will also be of some note, given the influence that the Chinese economy has on exports from NZ.
The Canadian Economy:
It has been a very quiet week for economic data in Canada. Later today the latest inflation numbers will be released, although with inflation being so tepid currently, these will be of limited impact. Next week sees the sole focus on the Retail Sales number on Wednesday. Current expectations for the Bank of Canada is to leave the cash rate unchanged for some time, most probably all of 2012.
The Japanese Economy:
Japanese 2011 Preliminary 4th quarter GDP was released at -.6% on Monday, against an expectation of a .3% fall in activity. This may have contributed to the surprising  Bank of Japan (BOJ) quantitative easing initiative, to buy 10 trillion YEN worth of bonds. This is an effort to keep the longer term interest rates low, and stimulate the struggling economy. It also had the effect of weakening the incredibly strong YEN, which will certainly be seen as a positive externality by Japanese authorities.
The European Economy:
Some better economic news in Europe has been mildly encouraging this week. German economic sentiment numbers bounced back into positive territory, and French and German GDP numbers slightly beat expectations. Peripheral member bond yields also have maintained their recently lower levels for the most part, confirming the success of the European Central Banks longer term funding program for European banks. Greece remains the focus in the short term, but is not the absolutely critical concern to the wider global financial stability, that it once was.
Of note:
The Euro-group of finance ministers delayed the meeting where they were scheduled to commit further bailout funds to Greece. The new meeting is scheduled for Monday, but politically the situation has very ugly. The Greek populace are obviously upset at the austerity measures that have been passed by the interim parliament. Elections are due in April, and concerns from core European countries are that election pressure will see Greek politicians not follow through with the austerity measures, they have now agreed to. These measures are required in order to secure the bailout funds to action they debt swap plan, and ultimately avoid calamitous unmanaged debt default. German officials in particular have been openly skeptical of the Greek commitment to these austerity measures, and are seen as trying to inflict external control on the Greek nation. There is talk emerging that some kind of bridging loan maybe organized, to provide funds to avoid default, but ensure the austerity measures are followed through with, beyond the elections. One thing is certain, the wider market will continue to focus on this situation.