July 30, 2014

Japan’s output drops most since 2011 as consumers spend less

• Japanese Industrial Output (-3.3% MoM) in June
• ▲0.7% in May
• The widening impact to the economy of April’s sales-tax increase
• The manufacturing sector has cut back in response to  a slump in consumer spending and a failure of exports to pick up even after an 19% drop in the yen last year
• Japan’s economy doesn’t have a driving force, with consumer spending and exports having stalled
• Transport equipment ▼3.4% MoM
• Outputs of desktops, mobile phones and other communication equipment ▼9%
• Shipments tumbled for a fifth straight month, helping to ▲inventories which rose the highest since November 2012
• In contrast to Japan, South Kora’s industrial production surged 2.9% MoM in June, the most since 2009 September
• Question now is whether Abe will increase the levy to 10% from 8%

Skipped meals show pain as Philippine rate rise nears

• Inflation rate in the Southeast Asia nation more than doubled in less than a year, ▲to 4.4%
• Philippine government expects to have an immediate action
• The monetary authority has increased the reserve requirement ratio twice this year and the special deposit account rate once
• Higher interest rate may hurt demand in an economy. Q1 GDP ▲5.7%, which is below 6% for the first time in nine quarters.
• The government approved a plan to import an additional 500,000 metric tons of rice, and some prices of some items such garlic and oil have eased in recent weeks
• High food price is a potential economy growth risk. Food prices surged 7.4% in June YoY, the fastest pace in 2009, boosted by rice
• Malaysia ▲interest rate for the first time in more than 3 years
• India in June pledged to offload 5 million tons of rice at subsidized rate to stabilize rice at subsidized rate to stabilize prices

Consumer Confidence in U.S. jumps to highest since 2007

• Consumer confidence level ▲ to 90.9 Mom; 86.4 in May
• Increased employment opportunities led to brighter views of the U.S. economy
• Gas prices are low and equip markets remain robust as well
• Home prices rose in the 12 months ended in May at the slowest pace in more than a year as a lull in residential real estate limited appreciation
• Higher mortgage rates and strict lending standard are restraining demand, which will probably prompt sellers to lower expectations of how much they can get for their properties
• The unemployment rate dropped to an almost six-year low of 6.1%
• The difference between those who say jobs were hard to get and those who said employment opportunities were plentiful was the smallest since May 2008