Japanese GDP Posts Quick Turnaround

Daily Analysis - 08/06/2016

Japan's First Quarter GDP Was Revised Up 0.10%


The revised GDP numbers came in line with expectations following a preliminary print of 0.40%. Q1 GDP growth comes after a contraction of -0.40% in the last quarter of 2015. On a yearly basis, Japan's GDP was 1.90% adjusted, after posting a contraction of -1.10% in the fourth quarter last year – a quick turnaround.


German Industrial Production Rises in April

Industrial production in Germany increased more than expected in April, rising 0.80% for the month, according to data from statistics agency Destatis. The industrial production rebound follows March's -1.10% decline. Analysts expected industrial production to rise 0.70% for the month. Energy production was up 1.10% while construction fell 1.70%. Production of capital goods jumped 2.20% while consumer goods gained 0.40% for the month. The gains in industrial production come after early on Monday, factory output in April revealed a decline due to weak demand from foreign customers.



Eurozone Q1 GDP Revised to 0.60%

The final GDP revision to the first quarter GDP in the Eurozone was higher at 0.60% from 0.50% previously on a quarter over quarter basis, while year over year the GDP growth rate was revised to 1.70% from 1.50%. Economists were expecting to see no change in today's revision. Contributing to the revisions was consumer spending growth which was revised to 0.60%, up from previous estimates of 0.30%. Investment also edged higher to 0.80% for the quarter but net trade was adjusted lower as imports outpaced exports during the period.


US Productivity Falls but Wage Pressures Remain

US labor productivity in the nonfarm sector fell more than expected in the first quarter by -0.60%, although wages grew strongly over the same period. Nonfarm productivity measures the amount of goods and services employees produce. The large drop in productivity came against a slowdown in economic activity in the US during the first quarter. Unit labor costs grew at yearly rate of 4.50%, up from previous estimates of 4.10%, while hourly compensation increased from 3.00% to 3.90%. The report hinted at the underlying wage pressures, which after adjusting for inflation increased 4.20%.


RBNZ to Decide on Interest Rates Today

The Reserve Bank of New Zealand will be meeting today at 2100 GMT for its monetary policy decision. While economists expect to see a rate cut of 25bps at today's meeting, recent economic data shows that the RBNZ could refrain from cutting rates while maintaining an easing bias. The RBNZ's official cash rate is at 2.25%. A minority of economists polled that the RBNZ could stand pat on its decision today, citing the risks that further rate cuts at this point in time could stoke the housing market prices, which benefits from lower interest rates.


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