For February

Inflation Gauge y/y: 4.0%, pr. 3.9%

Inflation in Australia continued to show elevated readings. The TDMI Inflation gauge was up 4% on the year, and has been a worry of late for the Australian central bank, which meets on Monday to decide on interest rates. The policy members have already signaled that they will use this month's meeting to raise rates a further 25 basis points in order to combat inflationary pressures.

The Aussie has been gaining the past two weeks, especially against the US Dollar, on anticipation of the move.

For February
Provided by Chartered Institute of Purchasing and Supply (requires subscription)

Manufacturing activity in the UK picked up more than expected in February, with the PMI registering a 51.3. The Pound got a small boost following the news against the Dollar, and managed to stop its overnight losses vs the Yen.

For the month of December
Release from Statistics Canada

GDP q/q: 0.2%, pr. 0.7%
Annualized GDP: 0.8%, forecast 1.0%, pr. 3.0%

The Canadian Dollar fell following the news that GDP slowed down more than expected for the month of December, registering a 0.7% decline. The USD/CAD pair has been drifting higher the last 2 sessions, after falling considerably in the first half of last week.

"Exports recorded a significant 2.2% decline in the fourth quarter, in the wake of a rising Canadian dollar and extended holiday shutdowns in several motor vehicle manufacturing facilities. Meanwhile, strong growth in final domestic demand and an accumulation of wholesale and retail inventories drove imports up 2.6%. The drop in exports was the first decline in six quarters, as Canada's international trade balance continued to deteriorate in the fourth quarter.

Consumer spending picked up in the fourth quarter of 2007, boosted by a 4.3% jump in motor vehicle purchases, higher travel spending abroad and increased purchases of air transportation. Business investment in machinery and equipment continued at a strong pace."

For February

Release from the Institute for Supply Management

Prices continue to rise for manufaturer, though not as rapid as in January. As recent manufacturing reports such as the Empire State and Philadelphia Fed reports have shown, activity is slowing down while prices are rising. We have been reiterating this trend of stagflation.

For January (s.a.)
Official Release from Australian Bureau of Statistics

Retail sales in Australia stalled in January after seven months of increases. The implication may be that consumers are absorbing higher interest rates and are less inclined to spend. The Australian economy has been humming along recently as record prices for its exports helped fuel low unemployment though at the same time a tighter labor market has pushed up wages and overall inflation.

This may a be a sign that the economy might be peaking. In the announcement from the Reserve Bank of Australia, Governor Stevens noted that housing was seeing some slowdown, and that consumers may be feeling the effects of higher rates. GDP growth, which is released tomorrow may show growth increasing at a slower pace than in the 3rd quarter, as has been evident around the globe.

For 4th Quarter
Provided by: Swiss Statistics

GDP y/y: 3.6%  forecast: 2.8%,  pr. 3.0% (r 2.9%)

The Swiss economy grew faster than expected  as spending accelerated. With a stronger Swiss Franc and thus lower exports expected, growth this year will continue to be supported by domestic demand. However, this will depend on whether the economy can withstand what Warren Buffet calls essentially a recession in the US. According to Bloomberg, earnings at UBS AG and Credit Suisse will take a hit from the global slowdown and will be another drag to growth.

Revised Release for 4rd Quarter
Provided by: EuroStat

GDP y/y: 2.2% forecast 2.3%, pr. 2.3%

Growth in the Euro-zone cooled in the fourth quarter. The Euro's climb against the greenback has caused European exports to be less attractive thereby causing companies to scale back on investments. Consumer spending fell for the first time in six years. A strong labor market has been a bright spot, but with decrease in investments, this is not likely to perpetuate by itself. There are similarities with the issue the ECB and the Fed have to deal with. For now, the ECB is slightly more concerned with inflation. The bank will meet Thursday, as the market is expecting a decision to hold rates.

For 4th Quarter.
Provided by: Ministry of Finance

Spending on capital fell by 7.7% in the 4th qaurter a larger than expected decline, and also the third contraction in a row. It was the largest fall in 5 years, and will factor in to lower GDP for the quarter. Profits were held up by rising oil and raw materials costs, pinching spending by companies. The USD/JPY bounced up from a new multi-year low, near support at 102.60.

For 4th Quarter (SA).
Provided by: Australian Bureau of Statistics

GDP y/y: 3.9%, forecast 3.8%, pr. 4.3%

Australian 4th quarter GDP fell more than expected, registering a 0.6% quarterly change. The central bank raised rates one more time to combat inflation, but this data may limit any further rate increases and can warrent the question if the central bank went too far in their tightening campaign. If growth begins to sputter as a result of rising credit costs, inflation may come down as the economy cools. However, strong demand for the countries' commodities should keep the economy, and inflation, going. The AUD/USD fell in favor of the greenback during Tuesday's session.

For January
Provided by: Eurostat

Retail Sales y/y: -0.1% forecast 0.1%, pr. 2.0%

January's retail sales figures showed some life after declining previously. There are two forces at work here. First strong employment is generating enough disposable income to support retail sales. Second, the appreciation of the Euro has somewhat reduced the impact of inflation that would have deteriorated purchasing.

Year on year however, sales showed a decline of 0.1%. Because the economic backdrop is very uncertain, January's gains should be taken with a grain of salt.

The ADP employment report paints a gloomy as the report registered the first negative since June of 2003. Employment in construction went for the 13th consecutive decline in February. The financial sector also shed 5,000 jobs for the 3rd drop in 5 months. Manufacturing employment dropped by 16,000. The services sector provided a pocket of job creation where employment grew by 71,000.

Following the news, the greenback fell hard across the board, except for against the Japanese Yen, and Swiss Franc.

Q1 of 2008 has a genuine possibility of showing negative GDP. A recession is officially 2 quarters of negative economic contraction. Q4 of last year showed the GDP stalled and can be interpretted either way. Technically, we won't hear an announcement of a recession until summer. But as Warren Buffet pointed out, we are essentially in a recession.

The Services PMI showed back to back months of contraction and pressured the greenback, albeit an even lower forecast. The index rebounded slightly from January's reading, which was the lowest since 2001. As the largest component of the US economy, the services sector contraction coupled with manufacturing contraction adds new evidence that a recession is imminent.

Provided by: Reserve Bank of New Zealand

Economic activity in New Zealand has receded a bit after a period of strong growth. Reserve Bank Governor Alan Bollard said:

"The outlook for economic activity has deteriorated somewhat since we reviewed the OCR in January. The main reasons are weaker prospects for world growth, tighter credit conditions, a sharper-than-expected slowing in the housing market, and recent dry weather conditions. On balance, we now expect GDP growth of around 2 percent over the next three years."

Despite downside risks, Bollard also mentioned that labor costs, additional fiscal stimulus, and high inflation expectations underpin an upside to inflation risk. Therefore, there won't be a rate cut anytime soon.

For January
Official Release from Australian Bureau of Statistics

Imports m/m: 5.4% pr. 0.4% r(0.1%)
Exports m/m: 1.7% pr. 1.8% r(1.3%)

Imports skyrocketted as the Australian dollar strengthened and commodities demand from China surged. 

Seasonally adjusted for January
Provided by: The Ministry of Economics and Technology

Factory Orders y/y: 9.5%, forecast 9.9%, pr. 6.2% (revised).

Though factory orders fell on the month, the annual growth figure showed an increase to orders of 9.5%.  

Provided by: European Central Bank

The ECB kept rates steady at 4.0%, and ECB President Trichet said that policy makers are primarily concerned about elevated inflation in the Euro-zone. Annual inflation was 3.2% in February 2008, unchanged from January, and the highest since the introduction of the Euro.