The weekly macro review for w/c 11 Mar 2019 – The more subdued US retail environment extended into Q1 2019. Retail sales in the US grew marginally in Jan, despite the falls in motor vehicle and gas sales. The rebound in sales excluding autos and gas was larger but sales remain below the Nov 18 level. Consumer sentiment continued to improve in Mar (prelim report) – readings on sentiment and current economic conditions are still below the same time a year ago, but future expectations are now ahead of last year. Current sentiment readings remain elevated and are consistent with continued spending growth.
Headline US CPI growth slowed due to lower energy prices. But core CPI remained steady around 2.1% led mostly by higher growth in prices for shelter.
The trend of accelerating growth in manufacturing activity through late 2016 to early 2018 has shifted to either a more constant rate or slower growth environment.
The broader slowdown in manufacturing activity was reflected in the US industrial production data (Feb) and durable goods report (Jan). US industrial production growth remained low in the latest month with production in manufacturing declining for the second month. Manufacturing capacity utilization is starting to reflect this slower growth.
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There were some positive signs from Europe;
German industrial production fell in Jan, but the decline in Dec was revised to a positive/growth result. Production in Jan remains below last year. Declines in production of intermediate and capital goods were the key drivers of the Jan result. The German trade surplus was lower as export growth remained below import growth. Importantly, export and import growth for the month outperformed in non-EU member states (“third countries”).
Broader Eurozone industrial production grew in Jan especially in key economies and across major industry groups.
The BoJ kept rates on hold and the statement acknowledged weaker export and industrial production activity – as a result of slowing overseas economies.
The growth in housing finance for Australia continued to decline in Jan – on both a value and number of commitments basis. The value of lending to households for dwellings was 21% below the same time a year ago in Jan.
There are more data releases covered in last weeks review. Use the links on the contents page to navigate to different country sections. Download the review here;
The outlook for w/c 18 Mar 2019 – Several central bank decisions will be in focus this week. The FOMC meets this week. While rates are likely to remain on hold, we will look for signalling on future rate changes, the end of the balance sheet run-off and the assessment of the US economy and outlook.
The BoE also meets this week as Brexit goes down-to-the-wire. Rates will most likely remain on hold. The BoE meeting will be after the likely third vote on Tuesday, but before the EC summit. Brexit “should be” clearer after the EC summit on 21-22 Mar – only 7 days before the 29 Mar Brexit deadline.
Data this week to track the slow-down in manufacturing and production – Japan (final) industrial production for Jan, US factory orders for Jan and the prelim round of Mar PMI’s for Europe, Japan and the US to round out the view of Q1 activity.
On the Aussie housing market decline – the official ABS Q4 house price index will be released. The Aussie labour market survey for Feb is out this week – leading indicators of employment growth have been slowing. Any material deterioration in the labour market could start to shift the RBA bias towards rate cuts.
US treasury supply will be more moderate this week. The US Treasury will settle approx. $182bn in ST bills this week raising approx. $21bn in new money.
The US-China trade negotiations – news on progress will likely continue to be drip-fed throughout the week.
More detail ( including a calendar of events) is provided in the briefing document – you can download the file here;
Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net
