For 2nd Quarter
Provided by: Statistics New Zealand
Official Release: Media Release

Labour Cost Index y/y: 3.5%, forecast 3.6%, pr. 3.5%
Avg. Hourly Earnings q/q: 2.0%, forecast 1.4%, pr. 1.1%
Avg. Hourly Earnings y/y: 5.2%

The Labour Cost Index increased 0.8% in the 2nd quarter, meeting expectations for the 2nd quarter. On an annual basis the LCI remained steady at a 3.5% pace, which is still the fastest pace since the series began in 1992.

For 2nd Quarter
Provided by: Australian Bureau of Statistics

HPI y/y: 8.2%, pr. 13.8% (1Q), 13.8% (4Q)

Australian housing prices fell in the 2nd quarter, registering a -0.3% change compared to the 1st quarter. Its the first time housing prices have shown a quarterly decline in almost 3 years, though forecasts had called for an even bigger decline. Compared to a year ago prices are up 8.2%, a slowdown from the 13.8% seen in the 1st quarter. Recent data suggests the housing market is straining as a result of the highest borrowing costs in 12 years. The economy as a whole is cooling as high interest rates choke inflation which is running above the RBA's target range of 2% of 3%.

AUD/JPY - Aussie Pares Some of Last Week's Losses vs Yen:  Both the Aussie and Kiwi were up on the Japanese Yen overnight, which cut into some of the steep falls seen in the pair last week. Today the Aussie rallied about 100 pips from its open.

For July
Provided by: Credit Suisse
Official Release: PDF

From the Release: "The SVME Purchasing Managers' Index (PMI) slipped 0.8 points in July to its current level of 54.1 points. This is the first time since mid- 2005 that the PMI has fallen below its longterm average of 54.5 points. It nonetheless remains above the critical 50-point threshold – for what is now the 41st month in succession. The sixth decline in the index in the last eight months signals a slower pace of expansion in industry. This cooldown in industrial activity becomes clearer if we look at the trend smoothed out over several months. The mean PMI for the year to date stands at 57.0 points, but was as high as 62.2 points for the comparable year-back period –a drop of 8%. Four out of the five index subcomponents were behind the latest fall, The PMI still began July at a high level, however. The output subindex yielded a little ground, but is still 1.3 points up on the low for the year it reached in May."

For July
Provided by: Chartered Institute of Purchasing and Supply (CIPS) (sub. req'd)

In the UK, the construction PMI came in at an 11-year low of 36.7 in July. The housing sector there has ground to a halt impacting the rest of the economy.

EUR/GBP - Euro Jumpes on Pound to Start the Week:  The Euro-Pound pair jumped in overnight trading and in the NY session as higher inflation will put the pressure on the ECB, while weaker growth in the UK has put the Bank of England on the defensive recently.

For June
Provided by the Commerce Department

Personal incomes were up 0.1%, a much smaller climb than May's 1.8%. May's numbers were fueled by tax rebates, while that affect was not as acute in June. Still, forecasts called for a 0.2% decline in incomes. Tax rebates from the government's stimulus package will give only temporary results as Americans face $4-a-gallon gasoline, tumbling home prices and mounting job losses. Spending was up 0.6%, cooler that the 0.8% pace in May, with price increases amounting for most of the difference. If adjusted for inflation, spending in June would have actually declined 0.2%. Rising prices present a worrying scenario for the FOMC, which meets this week, but will most likely hold rates as growth remains weak.   

From the Release: "Personal income increased $6.8 billion, or 0.1 percent, and disposable personal income (DPI) decreased $210.3 billion, or 1.9 percent, in June, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $57.1 billion, or 0.6 percent. In May, personal income increased $219.3 billion, or 1.8 percent, DPI increased $595.4 billion, or 5.7 percent, and PCE increased $76.5 billion, or 0.8 percent, based on revised estimates. The pattern of changes in income reflect the pattern of payments associated with the Economic Stimulus Act of 2008. Real disposable income decreased 2.6 percent in June, in contrast to an increase of 5.2 percent in May. Real PCE decreased 0.2 percent, in contrast to an increase of 0.3 percent."

For June
Provided by: Department of Commerce

Core PCE y/y: 2.3%, forecast 2.2, pr. 2.2% (rev from 2.1%)
PCE m/m: 0.8%
PCE y/y: 4.1%, forecast 3.7%, pr. 3.5% (rev from 3.1%)

The Personal Consumption Expenditure Price Index, a favorite measure of consumer inflation used by the Federal Reserve, saw prices jump 0.8% for the month of June. The Core PCE, which excludes food and energy increased 0.3%, higher than the expected 0.2%, with May's figure revised up to 0.2%. The year-over-year figure climbed to 2.3%, above the Fed target of inflation at the 2% level. Higher inflation will add pressure on the FOMC to raise rates, though no change is expected at the meeting this week. Today's data shows that the extra incomes that consumers went out and spent in June may have been undercut by price increases.

For July (s.a.)
Provided by: Australian Industry Group (AIG)
Official Release: PDF

From the Releaes:

■ "Services sector activity slumped further in July, with declining levels of consumer and business confidence further restraining household spending and business activity.
■ Firms continue to identify high interest rates and fuel prices as the key factors holding back demand for services.
■ The seasonally adjusted Australian Industry Group/Commonwealth Bank Performance of Services Index (Australian PSI®) fell 2.6 points to 42.8, below the key 50.0 level separating expansion from contraction.
■ New orders and supplier deliveries contracted for a fourth consecutive month, while sales and employment deteriorated at a faster pace.
■ The weakness in activity was broadly-based, although there were signs of resilience in the personal & recreational services and communications services sectors.
■ Activity fell in all states, with the rate of contraction slowing in only Tasmania and Queensland."

Provided by: Reserve Bank of Australia
Official Release: Statement

The Reserve Bank of Australia held rates steady at 7.25%. The Boards reported that "as a result of increases in the cash rate last year and early this year, additional rises in market interest rates and tougher credit standards, there has been a substantial tightening in financial conditions since the middle of 2007." This has led to a slowdown in demand, in conjunction with rising fuel costs, lowers asset values. The Bank opened the door for loosening policy as it believes slower demand will work to bring down inflation.

The Aussie fell to its rivals in the 15 minutes following the release, as the implications is for rate cuts to come in the future.

From the Release: "Given the opposing forces at work, considerable uncertainty has surrounded the outlook for demand and inflation. On balance, however, it is looking more likely that demand will remain subdued, and economic growth will be fairly slow, over the period ahead. Inflation is likely to remain relatively high in the short term, with the CPI affected by high global oil prices. Looking further ahead, inflation in both CPI and underlying terms is likely to decline over time, given the outlook for demand, provided wages growth remains moderate. The Bank’s forecast remains that inflation will fall below 3 per cent during 2010.

Weighing up the available domestic and international information, the Board judged that the cash rate should remain unchanged this month. Nonetheless, with demand slowing, the Board’s view is that scope to move towards a less restrictive stance of monetary policy in the period ahead is increasing."

AUD/JPY - Aussie Weakens Following RBA Statement, Carry Trade Retreats: The Aussie sank following the news against its rivals. The Aussie-Yen, a big destination for carry trade fell 160 pips following the statement finding support near 98.70. The prospect of RBA cuts in the future is a quick turnaround from a few months ago and has brought this pair down 500 pips in the last 2 weeks.

For June
Provided by: Office of National Statistics (ONS)
Current Release: (HTML)

Man. Production y/y: -1.3%, forecast -0.6%, pr. -0.8%, 0.1% (Apr), 0.5% (Mar)

Manufacturing output continued to contract in June, disappointing forecasts of a slight recovery. Decreases were widespread. Domestic demand is thinning as reflected by the record proportion of manufacturered products going to exports. Thus without demand from overseas, production would be declined even further.

The British economy is heading into a receission and manufacturers are facing higher costs in the face of declining demand. This adds pressure to the Bank of England to decreases rates although policy members have to deal with inflation at the moment. 

For July
Provided by: Chartered Institute of Purchasing and Supply (sub'n req'd)

An index of activity in the services sector, which surveys about 700 firms, stayed below the 50 level, marking another month of contraction. The headline number improved slightly from last month, which means the fall in activity was not as acute as in June, but the data is nothing to get excited over.

The Pound fell below 1.96 versus the Dollar overnight, as industrial production data disappointed. That's the lowest level in nearly 7 weeks. The Bank of England Monetary Policy Committee will meet on Thursday and look at reports showing weak services, manufacturing, housing, construction, and anemic financial lending. There does not seem to be light at the end of the tunnel either at this point, and the one thing that can come out of this period of slowdown is if inflation cooled. It's interesting to see how long the policy members will let economic growth suffer in order to meet their inflation targets.

GBP/USD - Pound Falls to 7 Week Low vs Dollar Prior to FOMC Statement:  The Pound-Dollar was pressured by its fundamental data and Dollar strength prior to the FOMC meeting. The pair fell 80 pips in favor of the greenback, breaking support at 1.96. This put it at a new 7-week low.  

For July
Latest Release Provided by: Institute of Supply Management

Business Activity Index: 49.6, pr. 49.9, 53.6
New Orders Index: 47.9, pr. 48.6, 53.6
Employment Index: 47.1, pr. 43.8, 48.7
Prices Index: 80.8, pr. 84.5, 77.0

From the Release: "The NMI (Non-Manufacturing Index) increased 1.3 percentage points in July to 49.5 percent, indicating contraction for the second consecutive month in the non-manufacturing sector. The Non-Manufacturing Business Activity Index decreased 0.3 percentage point to 49.6 percent. The New Orders Index decreased 0.7 percentage point to 47.9 percent, and the Employment Index increased 3.3 percentage points to 47.1 percent. The Prices Index decreased 3.7 percentage points to 80.8 percent in July, indicating a slower rate in price increases than in June. According to the NMI, nine non-manufacturing industries reported growth in July. Members' comments in July indicate concern about inflationary pressures and the effect on the economy. Respondents' comments are mixed about business conditions and vary by industry and company."

For July (not seasonally-adjusted)
Provided by: Nationwide
Official Release: PDF

Current Conditions: 47, pr. 56 (Jun), 60 (May), pr. 65 (Apr), 74 (Mar)
Expectations Index: 55, pr. 64 (Jun), 75 (May), pr. 74 (Apr), 79 (Mar)
Spending Index: 54, pr. 63 (Jun), 60 (May), pr. 65 (Apr), 67 (Mar)

From the Release: "The Nationwide Consumer Confidence Index fell by 11 points to 51 in July. Overall consumer confidence is 18% lower than this time last month and 46% lower than a year ago. These are the largest recorded falls in the index so far. More gloomy economic data, further falls in house prices, news of job losses and yet more increases in the cost of living on the horizon are likely to have contributed to the substantial drop in confidence this month.

The Present Situation Index, which measures views about the current economic and employment situation, and the Expectations Index, which reflects sentiment about the economy, labour market and household income over the next six months, fell by 18% and 15% respectively. The Spending Index, which reflects views about spending on household goods and major purchases, also dropped by 11% in the month bringing the index level to 54.

Fionnuala Earley, Nationwide’s chief economist, said: “The continuing downward trend in consumer confidence is not surprising given the recent batch of poor economic data. Talk of the increasing chances of a recession, more weakening in the housing market and the continuing rise of food and energy costs will have further dented confidence as will reports of job losses. Falling oil prices and lower fixed mortgage rates offer some good news, but a cut in the bank base rate is still unlikely this summer.” 

For June
Provided by: Australian Bureau of Statistics (ABS)

Home Loans y/y pr. -3.6%

The number of home-loan approvals fell to a four-year low in June, declining 3.7% from May. It seems that the Australian housing sector is catching the same bug already afflicting the US and the UK. Banks are cutting back on lending in 2008, and consumers, racked by high borrowing costs are unable to get financing that meets their terms. Prices have started backtracking. On Sunday, the quarterly house price index showed a 0.3% decline, the first in nearly 3 years. With the economy entering a period of moderation in growth, housing activity will only be pressured further. A weaker housing market will work the other way as well, as consumers already under siege from higher energy and food costs may cut back spending in the face of withering prospects for selling their homes.

The Reserve Bank of Australia has already signaled that it will move to lower rates, which is pressuring the Aussie as it continues its slide vs the US Dollar. In the last 10 sessions the pair has declined from 0.9800 to 0.9100.

Preliminary Measure for June
Provided by: Cabinet Office

For June (s.a.)
Provided by: The Ministry of Economics and Technology

For 2nd Quarter
Provided by: Statistics New Zealand
Official Release: PDF

Employment Change q/q: 1.2%, forecast 0.1%, pr. -1.3% (1Q), 0.9% (4Q)

See "Employment Change q/q" above for commentary.

For June
"Private Sector Machinery Orders excl. volatile items"
Provided by: Cabinet Office
Official Release: Summary

From the Release:

1. The total value of machinery orders received by 280 manufacturers operating in Japan fell by 4.8% in June from the previous month on a seasonally adjusted basis. In the April-June period it decreased by 1.4% compared with the previous quarter.
   Private-sector machinery orders, excluding volatile ones for ships and those from electric power companies, fell a seasonally adjusted by 2.6% in June, and showed increased of 0.6% in the April-June period.

2. In the July-September period the total amount of machinery orders was forecasted to fall by 2.9% and private-sector orders, excluding volatile ones, were forecasted to decrease by 3.0% from the previous quarter respectively. This forecast was basically made by summing up the figures from 280 machinery manufacturers."

For July - Seasonally Adjusted
Provided by: Australian Bureau of Statistics

The unemployment rate for July was 4.3%, which remains steady compared to the upwardly revised figure for July. This means the labor market in Australia was weaker last month than expected, and today's forecast of an increase to 4.3%, already happened last month. The RBA looks ready to act in order to counter a sharp drop-off in the economy, which it may be seeing. Though the export industry should remain doing well, other sectors of the Australian economy may start feeling the strain of consumers less willing to spend. 

See "Employment Change" above for further commentary.

For June (s.a.)
Provided by: German Federal Statistics Office (Destatis)
Official Release: Press Release

Imports m/m: 0.1%, forecast 1.8%, pr. 0.7% (May), -2.1% (Apr), 0.6% (Mar)
Exports m/m: 4.2%, forecast 1.8%, pr. -3.2% (May), 1.2% (Apr), -0.8% (Mar)

Exports picked up in Germany over June, after a May that saw a 3.2% decline. With import growth remaining flat, the trade balance showed a seasonally adjusted 18.1 billion surplus. Demand from Russian and China offset weaker sales in other markets like the US. The better than expected data is one bit of good - but dated - news for a German economy which has seen recent demand for foreign orders slipping.

From the Release: "According to provisional data of the Federal Statistical Office (Destatis), Germany exported commodities to the value of EUR 88.3 billion and imported commodities to the value of EUR 68.6 billion in June 2008. German exports of June 2008 were thus 7.9% and imports 5.3% above the respective June 2007 levels. Upon calendar and seasonal adjustment, exports and imports showed opposite month-on-month trends: Exports increased by 4.2%, while imports decreased by 0.1% on May 2008.

The foreign trade balance showed a surplus of EUR 19.7 billion in June 2008. In June 2007, the surplus amounted to EUR 16.7 billion. Upon calendar and seasonal adjustment, the foreign trade balance recorded a surplus of EUR 18.1 billion in June 2008."