German production rises whilst Australian construction appears to have turned the corner
German production rose moderately over the last month according to Germany’s official stats department adding belief to what many analysts believe is the powerhouse of the European economy, which will help to single handedly help turn around the area’s fortunes. In February 2014, production in industry was up by 0.4% from the previous month, the production of intermediate goods rose by 1.3%, while consumer goods production increased by 0.3%.
From Australia overnight we received data concerning the construction industry showing that, despite the number being below the critical 50 level which traditionally separates contraction from expansion, the industry appears to be on the mend. The figure printed came out at 46.2 in the month. It is the third consecutive month since the industry’s return to growth in the final quarter of 2013.
Asian markets sold off in the overnight – early morning trading session, reflecting a view among investors that the Bank of Japan would not immediately increase its monetary stimulus while the US Federal Reserve was unlikely to be steered off its course of reducing asset purchases. Markets in China were closed for a public holiday.
Developing East Asian economies will grow slower than forecast this year as China’s expansion moderates and political upheaval weighs on Thailand’s outlook a according to the World Bank. China will expand 7.6 percent this year, down from 7.7 percent projected in October, while Thailand will grow 3 percent, 1.5 percentage points lower than seen six months ago, the World Bank said in its East Asia and Pacific Economic Update released today. Developing East Asia is forecast to grow 7.1 percent in 2014, down from 7.2 percent seen in October, it showed.
Seasonally adjusted, German production in February 2014 up + 0.4 % on the previous month
In February 2014, production in industry was up by 0.4% from the previous month on a price, seasonally and working day adjusted basis according to provisional data of the Federal Statistical Office (Destatis). In January 2014, it increased by 0.7% from December 2013. Production in industry excluding energy and construction grew by 0.5%. Within industry, the production of intermediate goods rose by 1.3%, while consumer goods production increased by 0.3%. The producers of capital goods, however, reported a decrease of 0.2% on the previous month. Energy production and production in construction were down by 0.3% and 0.1% in February 2014.
Australian PCI: Construction decline slows in March
The national construction industry contracted at a milder rate in March with the seasonally adjusted Australian Industry Group/Housing Industry Association Australian Performance of Construction Index (Australian PCI®) up 2.0 points to 46.2 in the month. It is the third consecutive month since the industry’s return to growth in the final quarter of 2013 that the Australian PCI® has been below the critical 50 points level that separates expansion from contraction. The easing in the sector’s contraction was due to slower declines in both new orders and activity.
Market snapshot at 9:00 am UK time
The ASX 200 closed down 0.18%, the Hang Seng down 0.70% and the Nikkei down 1.69%. In Europe the bourses have opened down sharply; euro STOXX down 0.53%, CAC down 0.78%, DAX down 1.35% and the UK FTSE down 0.64%. Looking towards the New York open the DJIA equity index future is down 0.34%, SPX future is down 0.43% and the NASDAQ future is down 0.54%. NYMEX WTI oil is down 0.50% at $100.63 per barrel with NYMEX nat gas up 0.63% at $4.47 per therm. COMEX gold is down 0.25% at $1300.25 per ounce, with silver on COMEX down 0.53% at $19.84 per ounce.
Forex focus
The dollar was at $1.3708 per euro early in London after strengthening 0.3 percent last week to $1.3705. The yen added 0.2 percent to 103.08 per dollar, extending a 0.6 percent advance on April 4th. It gained 0.2 percent to 141.30 per euro, following a 0.7 percent jump at the end of last week to 141.54. The dollar remained stronger against the euro following a three-week rally before the U.S. central bank releases minutes this week of the Federal Open Market Committee’s March meeting.
Australia’s dollar declined 0.1 percent to 92.79 U.S. cents after touching 93.08 on April 4th, the strongest level since Nov. 21st. The statistics bureau is forecast to say this week that the nation’s unemployment rate rose to 6.1 percent in March from 6 percent in February, according to a Bloomberg survey.
Bonds briefing
Benchmark 10-year yields were little changed at 2.72 percent early in London. The figure compares with the average over the past decade of 3.46 percent. The price of the 2.75 percent security due in February 2024 was 100 1/4.
U.S. government securities due in more than a year were little changed in the month ended April 4th ranking No. 13 of 26 debt indexes around the world compiled by the European Federation of Financial Analysts Societies. They were in last place in the month ended April 3rd, the day before the jobs report. Treasuries climbed from last place among the world’s bond markets as investors bet employment growth is slow enough to keep the Federal Reserve from raising interest rates this year.
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