Thursday March 23 2017
New Zealand February Trade Deficit Largest Since 2007
Mario |

New Zealand posted a trade deficit of NZD 18 million in February of 2017 compared to a NZD 366.9 million surplus in the same month of the previous year. It was the biggest trade deficit for any February since 2007 and was well below expectations of a NZD 160 million surplus. The annual trade deficit for the year ended February 2017 was $3.8 billion, the largest since April 2009.

Exports fell 5.5 percent year-on-year to NZD 4.00 billion in February, mainly affected by a 98.8 percent fall in ships, boats & floating structures. The largest component, meat & edible offal rose by 4.4 percent (from +2.7 percent in January). The second largest component, logs, wood & wood articles fell 1.7 percent (from -4.0 percent). Shipments increased to China (6.3 percent from +12.3 percent in January) and Australia (2.1 percent from +12.8 percent in January), but declined to the EU (9.6 percent from -25.9 percent), South Korea (9.0 percent from -34.8 percent), Japan (5.7 percent from -10.6 percent), and the United States (3.0 percent from -6.1 percent).

Meanwhile, imports increased by 4.0 percent to NZD 4.02 billion, led mainly by a 20.3 percent increase in vehicles, parts & accessories (from +28.3 percent in January), and a 32.0 rise in petroleum & products (from +52.6 percent). Imports increased from Japan (6.3 percent from +39.7 percent in January) and the EU (2.9 percent from +0.6 percent). Shipments declined from China (10.2 percent), Australia (9.2 percent), and the United States (2.5 percent). 

Thursday March 23 2017
US New Home Sales At 7-Month High
US Census Bureau | Joana Taborda |

Sales of new single-family houses in the United States jumped 6.1 percent to a seasonally adjusted annual rate of 592,000 in February of 2017. It follows an upwardly revised 558,000 in the previous month, and well above market expectations of 565,000 as unusual warm weather boosted sales in the Midwest, West and the South. Meanwhile, sales of previously owned houses dropped 3.7 percent to 5480 thousand, down from a ten-year high of 5690 thousand in January.

Sales rose in the Midwest (30.9 percent to 89 thousand), the West (7.5 percent to 157 thousand) and the South (3.6 percent to 313 thousand) but slumped 21.4 percent to 33 thousand in the Northeast. 

The median sales price of new houses sold was $296,200, lower than $308,200 in the previous month. The average sales price was $390,400, above $355,300 in January.

The stock of new houses for sale went up to 261 thousand from 260 thousand in January. This represents a supply of 5.4 months at the current sales rate.

Year-on-year, new home sales rose 12.8 percent.

Thursday March 23 2017
US Initial Jobless Claims Rise To 7-Week High
DOL | Joana Taborda |

The number of Americans filing for unemployment benefits increased by 15 thousand to 258 thousand in the week ended March 18th 2017, above market expectations of 240 thousand. It is the highest reading in seven weeks. The 4-week moving average that removes week-to-week volatility increased by 1,000 to 240,000.

The previous week's level was revised up by 2,000 to 243,000. The 4-week moving average was revised up by 1,750 to 239,000.

The seasonally adjusted insured unemployment rate was 1.4 percent for the week ending March 11, a decrease of 0.1 percentage point from the previous week's unrevised rate. 

Continuing jobless claims fell by 39,000 to 2,000,000 during the week ending March 11. The previous week's level was revised up 9,000 to 2,039,000. The 4-week moving average was 2,026,750, a decrease of 32,000 from the previous week's revised (up by 4,500 to 2,058,750).

Thursday March 23 2017
Philippines Leaves Monetary Policy Unchanged
Bangko Sentral NG Pilipinas | Joana Taborda |

The central bank of Philippines left its benchmark overnight borrowing rate steady at 3 percent on March 23rd, 2017 as widely expected, saying inflation is expected to remain within the target of 3.0 percent ± 1 percentage point in 2017-2018. However, policymakers slightly lowered inflation forecasts for this year to 3.4 percent from 3.5 percent. In February, consumer prices went up 3.3 percent year-on-year, the highest since November of 2014.

Statement by the Bangko Sentral NG Pilipinas:

The corresponding interest rates on the overnight lending and deposit facilities were also kept steady. The reserve requirement ratios were likewise left unchanged.

The Monetary Board’s decision is based on its assessment that the outlook for inflation remains manageable, consistent with favorable growth prospects. While the average headline inflation for the first two months of 2017 has risen due to the recent increases in food and oil prices as well as base effects, latest baseline forecasts are slightly lower than previous forecasts and within the target range of 3.0 percent ± 1 percentage point for 2017-2018. Inflation expectations also remain anchored to the inflation target over the policy horizon.

The Monetary Board also observed that the balance of risks surrounding the inflation outlook remains tilted toward the upside, given the transitory impact of the proposed tax reform program as well as possible adjustments in transportation fares and electricity rates. Meanwhile, lingering uncertainty over the prospects of the global economy, due in part to possible shifts in macroeconomic policies in advanced economies, continues to pose a key downside risk to the inflation outlook. The Monetary Board also noted the beneficial effects on inflation of the removal of quantitative restrictions on rice importation. The Board emphasized that domestic economic activity is projected to stay firm, supported by buoyant household consumption and private investment, increased government spending, and ample credit and liquidity.

With these considerations, the Monetary Board believes that prevailing monetary policy settings remain appropriate. Looking ahead, the BSP will continue to monitor evolving economic conditions to ensure price and financial stability conducive to sustainable economic growth.

Thursday March 23 2017
Singapore Inflation Rate at 30-Month High of 0.7%
Statistics Singapore l Rida Husna |

Consumer prices in Singapore rose 0.7 percent year-on-year in February of 2017, compared to a 0.6 percent increase in January and in line with markets expectations. It was the highest inflation rate since August 2014, driven by a faster increase in cost of transport while prices of food rose further and cost of housing & utilities fell slightly less than in the prior month.

Year-on-year, upward prices pressure came from: household durables & services (1.5 percent from 2.1 percent in the prior month, largely due to a  2.9 percent increase in household services & supplies), health care (2.6 percent from 2.5 percent, mainly driven by a 3.5 percent rise in medical & dental treatment), transport (4.2 percent from 2.8 percent, mainly due to a 7.1 percent rise in private road transport), communication (0.7 percent from 0.4 percent) and recreation & culture (0.5 percent from 0.5 percent, largely due to a 6.1 percent increase in newspapers, book & stationery and a 0.3 percent growth in holiday expenses) and education (3.6 percent from 3.5 percent, due to a 3.7 percent rise in tuition & other fees and a 0.1 percent increase in school textbooks & related study guides). In contrast, cost declined for: clothing & footwear (-0.2 percent from-1.5 percent), housing & utilities (-3.1 percent from -3.2 percent, largely due to a 4.0 percent drop in accommodation) and miscellaneous goods & services (compared to a flat reading in a month earlier, due to a 2.0 percent drop in personal care).

Prices of food rose 1.3 percent in February, following a 1.9 percent gain in January. Among food, cost of food excluding food servicing services increased by 1.0 percent, compared to a 2.0 percent rise in a month earlier while food servicing services rose 1.5 percent, following a 1.8 percent gain in a month earlier. Among food excluding food servicing services, cost increased for bread & cereals (1.2 percent), meat (0.2 percent); fish & seafood (0.4 percent); milk, cheese & eggs (0.9 percent), fruits (2.6 percent), vegetables (2.7 percent); sugar, preserves & confectionery (1.7 percent) and other food (0.2 percent). In contrast, prices fell for oils & fats (-2.8 percent) and non-alcoholic beverages (-0.4 percent). Among food servicing services, prices increased for all categories: restaurant foods (0.9 percent), fast food (2.1 percent), hawker food including food courts (1.8 percent) and catered food (2.5 percent).

Core inflation, which excludes costs of accommodation and private road transport, went up 1.2 percent year-on-year, following a 1.5 percent gain in the prior month.

On a month-on-month basis, consumer prices remained unchanged, after gaining 0.2 percent in a month earlier.

Wednesday March 22 2017
New Zealand Holds Interest Rate At 1.75%
Mario |

The Reserve Bank of New Zealand kept its official cash rate unchanged at record low of 1.75 percent on March 22nd, 2017, as widely expected. The central bank left the monetary rate unchanged for the fourth straight meeting. Policymakers underscored that headline inflation has returned to the target band as past declines in oil prices dropped out of the annual calculation; that quarterly GDP was weaker than expected in the December quarter; and that global inflation has increased. They also reiterated that monetary policy will remain accommodative for a considerable period, as numerous uncertainties remain, particularly in respect of the international outlook, and policy may need to adjust accordingly.

Statement by Reserve Bank Governor Graeme Wheeler:

The Reserve Bank today left the Official Cash Rate (OCR) unchanged at 1.75 percent.

Macroeconomic indicators in advanced economies have been positive over the past two months.  However, major challenges remain with on-going surplus capacity in the global economy and extensive geo-political uncertainty.

Global headline inflation has increased, partly due to a rise in commodity prices, although oil prices have fallen more recently. Core inflation has been low and stable. Monetary policy is expected to remain stimulatory, but less so going forward, particularly in the US.

The trade-weighted exchange rate has fallen 4 percent since February, partly in response to weaker dairy prices and reduced interest rate differentials. This is an encouraging move, but further depreciation is needed to achieve more balanced growth.

Quarterly GDP was weaker than expected in the December quarter, but some of this is considered to be due to temporary factors. The growth outlook remains positive, supported by on-going accommodative monetary policy, strong population growth, and high levels of household spending and construction activity. Dairy prices have been volatile in recent auctions and uncertainty remains around future outcomes.

House price inflation has moderated, and in part reflects loan-to-value ratio restrictions and tighter lending conditions. It is uncertain whether this moderation will be sustained given the continued imbalance between supply and demand.

Headline inflation has returned to the target band as past declines in oil prices dropped out of the annual calculation. Headline CPI will be variable over the next 12 months due to one-off effects from recent food and import price movements, but is expected to return to the midpoint of the target band over the medium term. Longer-term inflation expectations remain well-anchored at around 2 percent.

Monetary policy will remain accommodative for a considerable period. Numerous uncertainties remain, particularly in respect of the international outlook, and policy may need to adjust accordingly.

Wednesday March 22 2017
South Africa Inflation Rate Slows To 6.3% in February
Statistic of South Africa | Deborah Neves |

Consumer prices in South Africa rose 6.3 percent year-on-year in February of 2017, following a 6.6 percent gain in January, matching market expectations. It was the lowest inflation rate since September of 2016, as prices rose less for food and non-alcoholic beverages and household contents and services.

Year-on-year, cost increased less for: food and non-alcoholic beverages (9.9 percent from 11.4 percent in January), household contents and services (3.4 percent from 4.2 percent), alcoholic beverages and tobacco (2.8 percent from 3.5 percent), clothing and footwear (4.8 percent from 5.1 percent) and miscellaneous goods and services (7.4 percent from percent 7.7 percent).

Additional upward pressure came from: transport (7.2 percent from 6.7 percent), housing and utilities (5.6 percent, the same pace as in January), recreation and culture (3.7 percent, at the same pace as in January) and restaurants and hotels (6.4 percent from 6.2 percent).

On a monthly basis, consumer prices went up 1.1 percent after a 0.6 percent gain in a month earlier. Cost rose faster for miscellaneous goods and services (5 percent from 0.8 percent in January), health (3.8 percent after being flat in the previous month) and continued to rise for food and non-alcoholic beverages (0.7 percent from 1.6 percent) and transport (0.9 percent from 1.5 percent).

The core inflation which excludes prices of food, non-alcoholic beverages, petrol and energy fell to 5.2 percent from 5. percent in the previous month. It was the lowest core inflation since December of 2015.

Wednesday March 22 2017
Japan Trade Surplus Jumps 245% YoY In February
Ministry of Finance l Joana Taborda |

Japan recorded a JPY 813.4 billion trade surplus in February of 2017, higher than a JPY 235.5 billion surplus a year earlier and slightly below market expectations of JPY 822 billion. Exports jumped 11.3 percent year-on-year, better than expectations of a 10.6 percent rise and the biggest gain since January of 2015, boosted by sales to China. Imports increased 1.2 percent, also higher than forecasts of a 0.6 percent gain, mainly due to oil.

Exports reached JPY 6346.5 billion, boosted by sales of machinery (16.6 percent), electrical machinery (13.5 percent), chemicals (16.4 percent), parts of motor vehicles (21.8 percent), manufactured goods (6.7 percent) and scientific and optical instruments (23.4 percent). Shipments increased to the US (0.4 percent) and China (28.2 percent).
Imports came in at JPY 5533.1 billion, mainly due to mineral fuels (38.1 percent), namely petroleum (69.9 percent). Purchases from main partners decreased: China (-17.7 percent), Western Europe (-7.7 percent), the US (-0.7 percent) and ASEAN countries (-1.5 percent) but rose from the Middle East (46.4 percent).

Tuesday March 21 2017
Nigeria Leaves Monetary Policy Unchanged
Central Bank of Nigeria | Deborah Neves |

The Central Bank of Nigeria held its benchmark interest rate unchanged at 14 percent at its March 2017 meeting, as expected. The inflation rate eased slightly for the first time in fifteen months to 17.78 percent in February, but remained well above the central bank target of 10 percent by 2020. Also, the economy shrank 1.5 percent in 2016, the first annual contraction in 25 years.

Excerpts from the Statement by the Central Bank of Nigeria:

The Committee re-evaluated the implications for Nigeria of the continuing global uncertainties as reflected in the unfolding protectionist posture of the United States and some European countries; sustenance of the OPEC-Russian agreement to cut oil production beyond July 2017; sluggish global recovery and the strengthening U.S. dollar.

The Committee also evaluated other challenges confronting the domestic economy and the opportunities for achieving price stability, conducive to growth in 2017. In particular, the Committee noted the persisting inflationary pressures; continuing output contraction; high unemployment rate; elevated demand pressure in the foreign exchange market; low credit to the real sector and weakening financial system indicators, amongst others.

Nonetheless, members welcomed the improved implementation of the foreign exchange policy that resulted in naira’s recent appreciation. Similarly, the Committee expressed satisfaction on the release of the Economic Recovery and Growth Plan, and urged its speedy implementation with clear timelines and deliverables. On the strength of these developments, the Committee felt inclined to maintain a hold on all policy parameters.

Besides, the Committee noted the need to create binding restrictions on growth in narrow money and structural liquidity and the imperative of macroeconomic stability to achieving price stability conducive to growth.

The Committee noted the consecutive positive contribution of agriculture to GDP in Q4 2016, a development partly traceable to the Bank’s interventions in the sector. The Committee remains optimistic that, if properly implemented, the newly released Economic Recovery and Growth Plan (ERGP) coupled with innovative, growth-stimulating sectoral policies would help fast track economic recovery.

In summary, the MPC decided to:

(i)  Retain the MPR at 14 per cent;
(ii) Retain the CRR at 22.5 per cent;
(iii) Retain the Liquidity Ratio at 30.00 per cent;
(iv) Retain the Asymmetric corridor at +200 and -500 basis points around the MPR.

Tuesday March 21 2017
Russia Jobless Rate Steady At 5.6% In February
Federal State Statistics Service | Yekaterina Gcuhshina |

The unemployment rate in Russia remained unchanged at 5.6 percent in February of 2017 from the previous month and in line with market expectations. The jobless rate stayed at the highest since May 2016.

The number of unemployed people decreased by 62 thousand to 4.226 million. Compared to February of 2016, the number decreased by 3 thousand.    

The number of economically active people increased by 200 thousand to 76.1 million, representing 52 percent of total population. Compared to February of 2016, the figure remained unchanged. 

Real wages increased 1.3 percent year-on-year, following 3.1 percent rise in January and below market expectations of 2.8 percent. It was the lowest increase since October 2016. Nominal wages went up 6 percent to RUB 35,900 (8.3 percent in January) and real disposable income fell 4.1 percent, following a 8.1 percent jump in January.

Tuesday March 21 2017
Hong Kong Consumer Prices Fall For 1st Time In 7-1/2 Years
Census and Statistics Department | Joana Taborda |

Consumer prices in Hong Kong fell by 0.1 percent year-on-year in February 2017, compared to a 1.3 percent rise in the previous month. It is the first decrease since August of 2009 due to several factors: difference in the timing of the Lunar New Year, which fell in late January this year but in early February last year; high base of comparison a year earlier when prices of basic foodstuffs surged because of bad weather conditions and downward adjustment in electricity charges. Taking the first two months of 2017 together to neutralise the effect of the Lunar New Year, consumer prices rose by 0.6 percent over a year earlier.

Year-on-year, decreases in prices were recorded for electricity, gas and water (-7.5 percent vs -7.6 percent in January); food (excluding meals bought away from home) (-3.7 percent vs 2.3 percent); durable goods (-3.7 percent vs -3.9 percent); clothing and footwear (-3.3 percent vs -2.9 percent) and miscellaneous services (-1.1 percent vs 3.6 percent). In contrast, increases were seen for transport (3.1 percent vs 2.4 percent), meals bought away from home (2.8 percent vs 3.1 percent), alcoholic drinks and tobacco (2.7 percent vs 1.6 percent) and miscellaneous goods (2.5 percent vs 2.4 percent).

Underlying consumer prices, which exclude the effects of one-off government relief measures went up 0.7 percent compared to 2.1 percent in January as the difference in the timing of the Lunar New Year resulted in lower charges for package tours. Another downward pressure came from falling prices of fresh vegetables.

Tuesday March 21 2017
UK Inflation Rate At 3-1/2-Year High Of 2.3%
ONS | Joana Taborda |

Consumer prices in the United Kingdom increased 2.3 percent year-on-year in February of 2017, above 1.8 percent in January and beating expectations of 2.1 percent. It is the highest inflation rate since September of 2013, boosted by rising fuel prices while food cost increased for the first time in 34 months.

Year-on-year, main upward pressure came from prices of transport (6.9 percent compared to 5.7 percent in January); housing and utilities (0.7 percent compared to 0.6 percent); recreation and culture (1.6 percent compared to 0.9 percent); restaurants and hotels (3.2 percent compared to 3 percent); food and non-alcoholic beverages (0.2 percent compared to -0.5 percent) and miscellaneous goods and services (1.1 percent compared to 0.8 percent). In contrast, cost of clothing and footwear edged down 0.1 percent (after being flat in January). 

On a monthly basis, consumer prices jumped 0.7 percent, following a 0.5 percent drop in January and above market expectations of 0.5 percent. The largest upward effect came from transport (1.2 percent compared to -0.6 percent in January), namely motor fuels, second-hand cars, sea and coach fares; recreation and culture (0.5 percent compared to -0.7 percent), namely personal computers including laptops and tablets; food (0.8 percent compared to 0.2 percent). 

The core index which excludes prices of energy, food, alcohol and tobacco increased 2 percent on the year, higher than 1.6 percent in the previous two months and above expectations of 1.8 percent. 

Tuesday March 21 2017
Spanish Trade Deficit Widens 31.3% YoY in January
Mineco | Joana Taborda |

The trade gap in Spain increased to EUR 3.13 billion in January of 2017 from a EUR 2.38 billion shortfall a year earlier. It is the biggest trade deficit since August of 2015 as exports increased 17.4 percent year-on-year and reached another record high for a January month while imports jumped at a faster 19 percent.

Exports went up to EUR 21.44 billion, boosted by sales of equipment goods (14.3 percent), food, beverages and tobacco (1.79 percent) and autos (7.6 percent). Exports increased to the European Union (15.3 percent), namely Italy (28.7 percent), France (16.6 percent), Germany (13.7 percent) and the UK (2.2 percent). Outside the EU, shipments rose to Canada (24.8 percent), the US (19.5 percent), Argentina (25.6 percent), Brazil (15.8 percent), Chile (6.3 percent), China (52.7 percent), South Korea (22.1 percent), Hong Kong (32.5 percent), India (50.1 percent), Japan (22.8 percent), Saudi Arabia (8.8 percent), UAE (61.4 percent), Morocco (24.6 percent), South Africa (22.3 percent) and Australia (8.1 percent).

Imports rose to EUR 24.57 billion, due to purchases of equipment goods (13.2 percent), chemicals (7.5 percent), energy (74.4 percent), autos (7.9 percent) and food, beverages and tobacco (17.8 percent).

Spain recorded a EUR 1.77 billion trade surplus with the EU, higher than a EUR 1.35 billion surplus a year earlier. With non-EU countries, the trade deficit widened 33 percent year-on-year to EUR 4.9 billion. 

Tuesday March 21 2017
Switzerland Trade Surplus Narrows In February
Swiss Customs Administration l Rida Husna |

Switzerland trade surplus narrowed to CHF 3.10 billion in February of 2017 from CHF 3.80 billion a year earlier and below market consensus of CHF 3.85 billion, as exports fell while imports went up.

Year-on-year, sales declined by 3.2 percent to CHF 16.99 billion, mainly due to machinery and electronics (-1.2 percent), watches (-10.0 percent), precision instruments (-3.0 percent), jewelry and bijouterie (-24.2 percent); food, beverages and tobacco (-3.4 percent), vehicles (-11.9 percent), plastic products (-7.6 percent) and paper and graphic products (-13.7 percent). In contrast, exports increased for: metals (5.0 percent) and  textiles, clothing and footwear (10.7 percent). Sales were flat for chemicals and pharmaceuticals. Among major trade partners, sales decreased to: the EU countries (-2.0 percent), Japan (-9.3 percent), Hong Kong (-3.2 percent), the US (-11.2 percent), the Middle-East countries (-28.5 percent) and South Africa (-37.8 percent). In contrast, sales went up to Russia (13.9 percent), China (19.4 percent), Singapore (7.6 percent), South Korea (31.7 percent), India (13.3 percent), Canada (13.8 percent), Brazil (41.0 percent) and Australia (2.3 percent).

Purchases rose 1.1 percent to CHF 13.88 billion, driven by  chemicals and pharmaceuticals (10.7 percent), vehicles (28.0 percent) and energy products (32.2 percent). In contrast, import fell for: machiner and electronic (-2.5 percent), metals (-2.5 percent); textiles, clothing and footwear (-2.4 percent),  food, beverages and tobacco (-5.3 percent), jewelry and bijouterie (-37.6 percent), plastic products (-8.1 percent), paper and graphic products (-9.6 percent) and watches (-22.2 percent).

In January 2017, trade surplus was upwardly revised to CHF 4.83 billion, the largest in history.

Monday March 20 2017
Chile Annual GDP Growth Slows To 0.5% In Q4
Luisa Carvalho |

The Chilean economy advanced 0.5 percent year-on-year in the last quarter of 2016, slowing from an upwardly revised 1.8 percent expansion in the previous period. It is the lowest growth rate since the 2009 recession as public spending slowed sharply and investment and exports slumped. Considering 2016, the Chilean economy expanded 1.6 percent, lower than a 2.3 percent growth in 2015.

Year-on-year, government spending eased sharply (1.7 percent vs 7.1 percent in Q3), fixed investment contracted further (-5 percent vs -2.4 percent) and external trade contributed negatively to growth as exports declined 2 percent (from 0.1 percent in Q3) and imports were flat (from -2 percent in Q3). On the positive note, household expenditure grew slightly more (2.4 percent vs 2.3 percent in Q3).

On the production side, growth eased for internal trade (3 percent from 3.4 percent in Q3); transport (2 percent from 4.2 percent in Q3); communications (1.7 percent from 2.6 percent in Q3) and personal services (3 percent from 6.1 percent in Q3).Business services declined 3.5 percent (from -2.1 percent in Q3); mining fell 3.3 percent (from -0.8 percent in Q3) driven by lower production of copper (- 3 percent) and manufacturing decreased 2.2 percent (from -0.8 percent in Q3), dragged down by beverages and tobacco (-2.2 percent), chemicals (-4.4 percent) and non-metallic minerals and metals (-8.5 percent). Also, construction edged down 0.2 percent (from 2.2 percent in Q3) and utilities fell sharply (-7.6 percent from -2.8 percent in Q3). In contrast, output rose faster for financial services (2.9 percent from 2.7 percent in Q3); agriculture (8.3 percent from 2 percent in Q3) and fishing (1.6 percent from 0.8 percent in Q3).

On a quarterly basis, the economy contracted 0.4 percent compared to an upwardly revised 0.9 percent expansion in the previous three months.

Considering full 2016, mining production shrank 2.9 percent (after being flat in 2015), mainly due to  copper (-2.7 percent compared to 0.1 percent). Contractions were also recorded in manufacturing (-0.9 percent from 0.2 percent in 2015) and business services (-1.8 percent compared to 1.2 percent). In addition, production slowed in agriculture (4.5 percent compared to 9.8 percent), mainly due to wine; construction (2.5 percent compared to 3.9 percent); financial services (3.7 percent compared to 5.4 percent); transport (3.3 percent compared to 3.7 percent) and restaurants and hotels (0 percent compared to 2.9 percent). In contrast, activities rose faster in internal trade (3.4 percent compared to 2.3 percent), personal services (5.2 percent compared to 1.8 percent) and real estate (2.7 percent compared to 2.2 percent). 

Friday March 17 2017
US Consumer Sentiment Remains Near 13 Year High
University of Michigan | Joana Taborda |

The preliminary reading of the University of Michigan's consumer sentiment for the United States rose to 97.6 in March of 2017 from 96.3 in the previous month and beating market forecasts of 97.

The barometer for current economic conditions jumped to 114.5 from 111.5 in February, reaching the highest level since November of 2000, largely due to improved in personal finances.

The gauge of future expectations increased to 86.7 from 86.5.

Americans expect the inflation rate to be 2.4 percent next year, below 2.8 percent in February and 2.2 percent over the next 5 years, lower than 2.5 percent the previous month.

Among Republicans, the expectations index was at 122.4, while it was 55.3 for Democrats, showing the divide in the outlook since Donald Trump’s election victory. Eighty-seven percent of Republicans expect continued gains in the economy over the next five years, compared with 22 percent of Democrats.

"The overall level of consumer sentiment remained quite favourable in early March due to renewed strength in current economic conditions as well as the extraordinary influence of partisanship on economic prospects", Surveys of Consumers chief economist Richard Curtin said.  "Overall, the sentiment data has been characterised by rising optimism as well as by rising uncertainty due to the partisan divide. Optimism promotes discretionary spending, and uncertainty makes consumers more cautious spenders. This combination will result in uneven spending gains over time and across products."

Friday March 17 2017
US Industrial Output Unchanged In February
Federal Reserve | Joana Taborda |

Industrial production in the United States stalled in February from January of 2017, following a downwardly revised 0.1 percent fall in the previous period and compared to market expectations of a 0.2 percent gain. Utilities shrank amid warm weather, offsetting rises in manufacturing and mining.

Manufacturing output rose 0.5 percent, its sixth consecutive monthly increase, compared to 0.5  percent rise in January.  The production of durables increased 0.6 percent. The gain was led by advances of more than 1 percent for nonmetallic mineral products, fabricated metal products, and machinery. The only substantial losses within durables, about 1.5 percent each were recorded for the electrical equipment, appliance, and component industry and the furniture and related products industry. The index for nondurables rose 0.4 percent; gains of more than 1 percent were recorded by paper and by plastics and rubber products, while the only losses were posted by textile and product mills and by chemicals. The output of other manufacturing (publishing and logging) fell 0.5 percent. 

The mining output jumped 2.7 percent in February after moving up 2.2 percent in January.

In contrast, utilities fell 5.7 percent, as continued unseasonably warm weather further reduced demand for heating

At 104.7 percent of its 2012 average, total industrial production in February was 0.3 percent above its level of a year earlier. 

Capacity utilization for the industrial sector declined 0.1 percentage point in February to 75.4 percent, a rate that is 4.5 percentage points below its long-run (1972–2016) average. The rates for nondurables and for other manufacturing (publishing and logging), at 75.4 percent and 60.5 percent, respectively, remain significantly below their long-run averages. Utilization for mining jumped 2.1 percentage points to 80.5 percent but is still well below its long-run average. The operating rate for utilities fell 4.4 percentage points to 70.9 percent, its lowest recorded level. 

Friday March 17 2017
Eurozone Posts Biggest Trade Gap Since 2013
Eurostat | Yekaterina Guchshina |

The Eurozone trade balance shifted to €0.6 billion deficit in January 2017 from €4.8 billion surplus in the same month of the previous year. It was the first trade gap since January of 2014 and the biggest since January of 2013. Exports increased 13 percent to €163.9 billion while imports went up at a faster 17 percent to €164.5 billion.

Meanwhile, the European Union recorded a €16.2 billion deficit in trade in goods with the rest of the world, compared with a €12.1 billion gap in January 2016. 

Exports went up 16 percent to €141.2 billion from €121.4 billion a year earlier. Exports of primary goods surged 33 percent to €21.7 billion, led by an increase in sales of energy (67 percent) raw materials and (34 percent) and food and drink (11 percent). Also, manufactured goods rose 13 percent to €112.6 billion, driven by chemicals (16 percent), machinery and vehicles (15 percent) and other manufactured goods (8 percent). Among trading partners, the biggest increases in exports were reported for Russia (45 percent), the US (19 percent), China (18 percent) and South Korea (22 percent). 

Imports rose 18 percent to €157.4 billion compared to €133.5 billion. Purchases of primary goods rose 10 percent to €15.3 billion, led by energy (13 percent), raw materials (4 percent) and food and drink (8 percent). Imports of manufactured goods increased 35 percent to €49 billion, driven by chemicals (60 percent), machinery and vehicles (23 percent) and other manufactured goods (5 percent). Among trading partners, the biggest increases in imports were reported for Russia (59 percent), Turkey (48 percent), South Korea (45 percent) and Switzerland (16 percent).

Friday March 17 2017
Italy Posts Largest Trade Gap In 4 Years
Istat | Yekaterina Guchshina |

Italy's trade balance shifted to €0.57 billion deficit in January 2017 from €0.03 billion in the same month of the previous year while market expected €3.45 billion surplus. It was the first trade gap since January of 2015 and the biggest since January of 2013. Exports increased by 13.3 percent to €31.7 billion, led by higher purchases of coke and refined petroleum products and vehicles; while imports grew by 15.5 percent to €32.3 billion, as purchases of crude oil and coke and refined petroleum products rose the most. With EU countries, Italy registered a trade surplus of €0.3 billion while with non-EU ones a trade gap of €0.9 billion.

Year-on-year, exports rose 13.3 percent to €31.7 billion, boosted by higher sales of: coke and refined petroleum products (69.4 percent); vehicles (27.7 percent); pharmaceuticals (25.9 percent); and electrical equipment (16.2 percent). By main industrial groups, sales rose for: energy (75.7 percent); intermediate goods (11.4 percent); capital goods (14.1 percent); and consumer goods (9.4 percent).

The biggest increases in shipments were reported for: ASEAN (57 percent); Russia (39.4 percent); China (36.5 percent); the United States (35.8 percent) and Japan (28.8 percent). 

Imports increased 15.5 percent to €32.3 billion, led by gains in purchases of: crude oil (123.9 percent); coke and refined petroleum products (53.6 percent); vehicles (27.9 percent); natural gas (17.3 percent); and base metals (15.8 percent). By main industrial groups, purchases rose for: energy (62.5 percent); capital goods (13.1 percent); intermediate goods (15.9 percent); and consumer goods (2.1 percent).

The rise in imports mainly reflected the increase in purchases from OPEC countries (53.4 percent), Russia (43.3 percent), Turkey (29.6 percent), Austria (23 percent) and Spain (20.6 percent).

Thursday March 16 2017
Chile Cuts Interest Rate To 3.0%
Mario |

The Chilean Central Bank cut the key rate to 3.0 percent on March 16th of 2017 after leaving the Monetary Policy Rate (MPR) unchanged in February in an attempt to boost growth amid a slowdown in inflation. The decision matched expectations. In the press release, the central bank stressed that inflation remains within target and that economic activity remains sluggish. Policymakers underscored that further easing could be seen if current macroeconomic and inflationary trends persist.

Inflation came at 2.7 percent in February, marginally down from January’s 2.8 percent and within the central bank’s target of 2.0-4.0 percent. Core inflation dropped from 2.7 percent in January to 2.3 percent in February, the lowest figure since December 2013. The Central Bank predicts year-end inflation of 2.7% in 2017.

The latest economic survey by the Chilean Central Bank showed that although analysts kept unchanged their 2018 GDP estimate, recent data led them to lower their growth expectations for this year. Industrial production returned to the red in January, falling 0.9 percent year-on-year after growing 1.4 percent in the previous month. Mining dropped 1.9 percent and manufacturing fell 1.1 percent.  

Statement by the Central Bank of Chile:

Internationally, global financial conditions have remained favorable. In the developed world, inicators continue to point to a scenario of stronger growth and higher inflation. In this context, expectations of a monetary policy normalization have strenghtened, especially in the US. Commodity prices decreased, most notably oil. Overall, imporant risks persist.

On the domestic front, annual inflation was 2.7%, in line with forecasts in December's Monetary Policy Report. Inflation expectations at the end of the projecdtion horizon are near the target, although for the coming months they are in the lower part of the tolerance range. Activity and demand indicators remain weak. In the labor market, salaried employment deteriorated further, although the unemployment rate remained stable.

The Board estimates that, if the recent trends of the economic scenario persist, and so their implications on the medium-term inflation outlook, it could be necessary to increase the monetary impulse. At the same time, it reiterates its commitment to conduct monetary policy with flexibility, so that projected inflation stands at 3% over the policy horizon.