Recent Updates

  • US: Consumer Credit, Wholesale Trade (Jun), Employment Situation (Jul)
  • Global Sector PMI (Jul)
  • International Surveys: WMA Investor Outlook Survey (Jul)
  • Mauritius: CPI (Jul)
  • more updates...

Economy in Brief

EMU Inflation Rate Moves Lower 
by Robert Brusca July 31, 2009

Inflation remains under control in the EMU region in July. Despite ECB concerns about inflation and German and other concerns about the degree of stimulus money supply growth remains very tepid in the EMU region and inflation continues to drop. In July the FLASH HICP (a figure for which there are no details available) fell by 0.2%. Overall inflation on this measure is a negative 0.6% over 12-months and is running at a pace of zero over three months.

HICP inflation has fallen in two of the last three months in Germany. German inflation is down by 0.7% over 12-months. Inflation even fell in Italy in July and prices in Italy are falling over 12-months as well.

On balance the news from Europe is quite good on the inflation front. Japan also reported out a decline in CPI prices. For Japan it was June inflation falling by 1.7% Yr/Yr.

Growth: both sides of the pond
The US GDP report reverberated with signs that the slowdown is abating as US exports cut the rate of descent and most US GDP components cut their rate of descent as well. US GDP dropped at just a 1% annual rate, making positive growth in Q3 a real possibility. The fact that nearly all GDP components in the US cut their pace of decline is a good sign. The fact that inflation remains under control throughout the global economy is another good sign. The data from the EU Commission yesterday reminded us that although ‘things’ are improving the diffusion readings on growth by sector show that that contraction is overwhelmingly the name of the game across Europe. The US alone looks poised to break the growth barrier any minute.

Growth, inflation and central banks
Today is a day when we are getting some of the news we have been waiting on for a long time. It is still not clear how much of an inflation threat we have when the US economy turns around. For now the growth turnaround appears to be nearly at hand. Inflation appears to still be well under wraps. It seems that the world’s central banks are in a good a position to look at what they have done and to make the needed adjustments without creating one sort of chaos or another. But you never can tell until they have done something. The one fly in the ointment is the still large external imbalances and the behavior of exchange rates. Everyone seems to want a weak currency and mathematically it just is not possible. This will be the market to keep close watch on as things begin to improve.

Trends in EMU HICP; Flash Index
  % mo/mo % saar
  Jul-09 Jun-09 May-09 3-Mo 6-Mo 12-Mo Yr Ago
EMU-13 -0.2% 0.3% 0.0% 0.0% 0.3% -0.6% 4.0%
Core #N/A 0.1% 0.0% 1.0% 0.9% 1.3% 2.5%
Goods #N/A 0.3% 0.1% 2.8% 1.1% -1.5% 5.0%
Services #N/A 0.1% 0.1% 2.2% 1.2% 1.9% 2.5%
Germany -0.4% 0.5% -0.2% -0.4% 0.0% -0.7% 3.5%
France #N/A 0.2% 0.0% 0.3% 0.3% -0.6% 4.0%
Italy -0.6% 0.3% 0.0% -1.1% 0.7% -0.1% 4.1%
Spain #N/A 0.4% -0.1% 1.0% -0.5% -1.0% 5.0%
Core excl FE&A              
Germany #N/A 0.2% -0.1% 1.5% 1.3% 1.2% 1.7%
Italy #N/A 0.1% 0.1% 1.1% 0.9% 1.6% 3.0%
Spain #N/A 0.2% 0.0% 0.8% -0.3% 0.8% 3.4%
Blue shaded area data trail by one month        
large image