Flood of economic data paints accurate picture of economy

Australia: 

The TD Securities/Melbourne Institute measure of monthly inflation rose 0.7% in December pushing its headline annual inflation rate up to 2.7%. The official CPI figures for the December quarter are due out on Wednesday.

The Australian Chamber of Commerce and Industry quarterly survey was released yesterday. 

It showed an improvement in December quarter business conditions but expectations for the March quarter were a little softer. 

Growth is expected to occur at a slightly slower pace. Employment intentions were negative as were investment intentions due to rising spare capacity.

The St.George / Melbourne Institute Household Financial Conditions index rose 4.3% in December to 132.6.  The index grew by 9.3% on a year ago, the largest annual percentage rise since the data goes back.  

The index has now risen above its average over the past five years and is only 1.4% below the high recorded in the post-GFC era. 

The improvement in the financial conditions index suggests that more households are finding it easier to save. More households have been able to "save a lot" and less are "running into debt" or needing to draw on their savings.

Share Markets: 

The US Martin Luther King holiday led to subdued trading overnight with US markets closed. In Europe, markets were flat with the FTSE100 up just 0.1% and the French market down by 0.1%.

The German Dax index was a touch softer falling 0.3%.

Based on the SPI200 futures contract, the Australian market is set to open seven points lower this morning.

Bonds:

Trading was thin in global markets overnight with US markets closed. Borrowing costs in Ireland were assisted by Moody's decision to reinstate Ireland's investment grade credit rating.

Ireland's economic fortunes are picking up although concerns remain regarding bad loans within its banking system.

Foreign Exchange: 

The USD index softened overnight allowing the AUD to make modest gains early in the session. Speculation emerged overnight of possible changes to UK monetary policy.

A pick up in the UK  economy may lead to the Bank of England lifting interest rates sooner than had been generally expected.

Commodities:

Commodity prices were little changed with many markets closed.  The perception of weakness in Chinese economic growth combined with developments on sanctions towards Iran saw the price for Brent oil move lower. The price of gold was little changed overnight.

China: 

There was a landslide of Chinese data released yesterday. Almost all outcomes met expectations. GDP grew 7.7% over the year, industrial production rose 9.7% for the year and retail sales rose 13.6%.

Yesterday we reported that Chinese house prices rose over 15% for the month of December. That was incorrect; it should have said over 15% for the year to December.

Europe:

The German PPI rose 0.1% in December, only its third rise for the year. Producer prices continued to contract on an annual basis, falling 0.5% over the year.

Japan:

Industrial production in Japan fell 0.1% in the month of December to be up 4.8% over the year. The annual pace was marginally slower than the 5.0% seen in the year to November.

New Zealand: Data from the Real Estate Institute of New Zealand indicates that house prices in New Zealand fell 1.0% in December to be up 9.2% over the year.

United Kingdom: UK house prices accelerated in December according to the Rightmove index of asking prices. The 6.3% annual pace was the fastest since late 2007.

United States: No data released due to the Martin Luther King public holiday.


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