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Australia’s 1st quarter revives with the trade surplus; Eurozone inflation seeing a slowdown and the US worker productivity has increased just modestly in the 1st quarter

May 4 • Morning Roll Call • 434 Views • No Comments

After the disappointing end to last year, the Australia’s trade surplus came to a 10 month peak yesterday for the month of March. According to the Australian Bureau of Statistics, approvals for new house building has reached a 3 year high in March, with swift population growth supporting the construction requirements for the coming months. The trade surplus went to AUD 1.53 billion, as opposed to the expected AUD 0.68 billion in March. In addition, Westpac Senior Economist, Andrew Hanlan noted that the real net exports most likely have made a positive impact on growth, whereas a neutral impact was expected. The outlook for exports seems also positive and analysts now assume that GDP growth may have doubled in March quarter to approximately 1%. The acceleration would be welcomed by the RBA, which is counting on positive results this and next year in order to revive inflation and wages.

On the other hand, the Eurozone inflation slowed down in April according to the readings received yesterday, where the flash reading fell to 0.7% from 1% in the previous month. The weak reading coming from Eurostat follows the disappointing GDP, export and sentiment figures and output, all indicating the peak of Eurozone economic growth in the 5 year run, and is expected to slow down to a moderate level, below the optimistic forecasts. Furthermore, last week during the ECB policy meeting it has been noted that President Draghi has acknowledged the moderate pace of Eurozone recovery, referring as well to the loss of momentum broadly based across countries and all sectors. With all this in mind, the analysts believe that the ECN would wait until July to implement the phasing out its stimulus plan.

From the UK, the service sector picked up in April, however it has remained passive as per the business survey released yesterday. The services PMI index rose to 52.8 but the expected forecast was for it to reach 53.5 in April. As per Chris Williamson, chief business economist at Markit, the disappointing services data will increase expectations that the MPC would not be eager on the rate hike and any further slowing would question the November rate hike was ill-timed. Manufacturing in the US, which is 12% of the overall economic activity is seeing an impact on production with the lack of skilled workforce and the imposed tariffs from Trump administration on steel and aluminum imports.

Investors were keeping a close eye on the US nonfarm productivity on Thursday, where the actual numbers were less than expected with 56.8 as opposed to the forecasted 58.1. Nevertheless, the worker productivity has increased just modestly in the 1st quarter, where the hourly output per worker rose at 0.7% annualized rate in the first 3 months.
Today the main focus will be on the US April payroll reports, as well as the FOMC members, Dudley and Williams speeches. Europe will not bring high impact news and the traders may want to have a look at the final services PMI readings.

EUR Final Services PMI
EUR Retail Sales m/m
EUR German Buba President Weidmann Speaks
USD Average Hourly Earnings m/m
USD Non-Farm Employment Change
USD Unemployment Rate
USD FOMC Member Dudley Speaks
USD FOMC Member Williams Speaks


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