Japan core machinery orders jumped to a five-year high in November
Japan’s core machinery orders jumped to a five-year high in November, a sign companies may be ready to ramp up investment and increase wages – key elements in Prime Minister Shinzo Abe’s strategy to revive the world’s third-biggest economy. The upbeat data is likely to ease concerns about capital expenditure, a weak link in an otherwise robust economy, and may allow the Bank of Japan to hold off on expanding its monetary stimulus any time soon, analysts said. Core machinery orders, a highly volatile data series regarded as an indicator of capital spending in the coming six to nine months, jumped 9.3 percent in November from the previous month, data showed on Thursday. That was the fifth biggest rise on record and blew past a median market forecast for a 1.2 percent increase. The value of core orders, at 882.6 billion yen ($8.5 billion), was the biggest in more than five years, prompting the government to raise its assessment to say orders are “increasing as a trend.” Abe’s plan – dubbed “Abenomics” – is to combine fiscal spending, economic reforms and monetary stimulus to pull Japan out of a decades-long economic slump. His efforts have already paid dividends with Japan’s economic growth outpacing its G7 counterparts in the first half of last year. BOJ Governor Haruhiko Kuroda maintained his upbeat view on the economy, saying it will continue a moderate recovery despite the likely pain from a sales tax hike in April. “Japan’s economy is making steady progress toward achieving the BOJ’s 2 percent price target,” Kuroda told a quarterly meeting of the bank’s regional branch managers on Thursday. In a sign the recovery is broadening, the BOJ revised up its assessment for five out of nine regional economies, citing robust consumer spending as companies increase hiring or wages.
Australia jobs suffer surprise drop, Ausie sank to the lowest price since August 2010
Australian employers shed jobs at the fastest pace in nine months in December while full-time positions suffered their biggest drop since mid-2011, an unlooked-for blow that hammered the local dollar to its lowest in over three years. Investors reacted by reviving the prospect of another cut in interest rates from the Reserve Bank of Australia (RBA), which has been signalling it would rather not ease again from the current record low of 2.5 percent. Market odds on a move by June narrowed to near one-in-two:, from one-in-four ahead of the jobs figures. In a report littered with unwelcome milestones, the Australian Bureau of Statistics found employment fell by 22,600 in December, confounding forecasts for a modest rise of 7,500. Full-time jobs fared even worse by diving 31,600. While unemployment did stay at 5.8 percent for a third straight month, it was only because the participation rate dropped to its lowest since April 2006. The central bank has shown a preference for any further easing in policy to come via a lower.
Euro zone inflation slows as expected in December
The European Union’s statistics office confirmed today that Euro zone inflation slowed in December, in what the European Central Bank attributed last week to a one-off change in the method of calculating price growth in Germany. Consumer prices in 17 countries sharing the euro last year rose 0.3 percent on the month, putting the annual inflation rate at 0.8 percent, down from 0.9 percent in November, but a tad above 0.7 percent in October. The ECB, which wants to keep inflation below, but close to 2 percent over the medium term, expects a prolonged period of low inflation but sees no immediate risk of deflation. Eurogroup President Jeroen Dijsselbloem said earlier on Thursday consumer prices were unlikely to slow further and the current low level is not a major threat to economic recovery. The October inflation level was a nearly four-year low and pushed the ECB towards a cut in its key lending key rate to a record low of 0.25 percent in November. The monthly consumer price increase in December was led by a 0.6 percent rise both in prices of services and the highly volatile energy costs. Prices of food, alcohol and tobacco were up by 0.5 percent while costs of non-energy industrial goods fell 0.3 percent when compared with November. Consumer prices in Germany, Europe’s largest economy, rose 0.5 percent on the month in December, but the annual inflation dropped to 1.2 percent from 1.6 percent in November.