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By HaleStewart March 27, 2015 9:35 am
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International Economic Week in Review: Euro Turnaround May Be In Process Edition

          Let’s start by looking at the US, where housing news was very positive: existing home sales increased 1.2% and new home sales were up 7.8% (both figures are M/M).  On the negative side were durable goods orders, which decreased 1.4%.  This latest contraction continues a recent trend of disappointing headline numbers:

The weak readings also correspond to the dollar’s rally, which is probably a primary cause of the slowdown.  Finally, the year over year rate of inflation was 0%, further reflecting the impact of weak oil prices.     

     News from the EU continues to point to a return to growth.  The flash PMI composite estimate was 54.1, which continues the trend of recent increases:

The EU’s two largest economies broadly bolstered this release.  Germany’s PMI was 55.3, with manufacturing printing at 52.4 and services reported at 55.3.  France’s composite number was 51.7.  Their services sector reading was positive with a reading of 52.2, but their manufacturing sector continues to struggles at a 47 level.

     News from the UK continues to be positive. Retail sales increased 5.7% Y/Y, indicating British consumers are responding positively to lower unemployment levels.  Inflation dropped to 0% Y/Y, but the primary cause of this decrease was the drop in energy prices, which the Bank of England considers a transitory factor. 

Finally, housing prices increased 5.1%.

     There was only one Chinese number last week: the HSBC manufacturing number, which was reported at 49.2. 

This weaker reading continues a trend for this data series of prints right around the 50 level, indicating the Chinese manufacturing sector is clearly slowing. 

     Japanese news was mixed.  On the positive side stands the flash PMI number of 50.4 and the very low unemployment rate of 3.5%.  But these positive numbers were largely offset by weak consumer spending numbers: retail sales were down 1.8% Y/Y and household spending was off 2.9% for the same period.  This number has been printing negative numbers since the sales tax increase last year.  Finally, inflation was reported at a Y/Y level of 2.2%.

     The news from the EU continues to give us hope that a turnaround is in place.  In contrast, US news is now indicating 1Q15 will be fairly weak as a direct result of a strong dollar negatively impacting exports.  Concern about Japan continues; the economy is three years into Abenomics, and it is still struggling. 


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