Australian GDP in Q1 of 2015 grew by 0.9% in comparison with that of Q4 2014 and by 2.3% in comparison to that of Q1 of 2014. This is the strongest growth in a year. Furthermore, it was expected that the values would only be 0.7% and 2.1% respectively. GDP values for the final quarter of 2014 in comparison with the previous quarter were left unchanged at 0.5%. The Treasurer of Australia, Joe Hockey, reckons that today’s data indicate wide reaching economic strength. The Aussie/Yank pair grew to 0.7818 on the news, although corrected back to 0.7769.
Growth in exports, increased consumer spending and a boom in housing construction has helped kick-start economic growth. Although it must be said, investment in the mineral extraction sector has been weak, whilst the sharp fall in the prices of raw material have become the ball and chain around Australia’s ankle, and will ensure economic growth is slow over the course of next year.
The HSBC May PMI for the service sector in China grew to 53.5, thus reaching an 8-month maximum. Simultaneously, the index for new orders and employment in the service sector grew to a maximum unseen for a few years. The May value for the index was higher than that of April at 52.9.
A set of PMI data from the Eurozone was also published today: the May PMI in the service sector was 53.8 (April: 53.3); the compound PMI was 53.6 (April: 53.4); and the PMI in Italy dropped to 52.5 (April: 53.1).
More positive news for the Eurozone economy came from France. The service sector PMI there was reassessed upwards from 51.6 to 52.8. This also lead to an upwards reassessment of the aggregated index from 51.0 to 52.0. The value for Germany also rose, but the composite index was down slightly. Spanish data worsened a touch.
Unemployment in the Eurozone fell to 11.1%, the lowest value since March 2012, and was better than the 11.2% expected estimate. Nevertheless, the unemployment rate in the Eurozone is still high in comparison with rates from other developed economies.
Growth in the Eurozone retail sales sector in April was also fixed at its 0.7% in comparison with March and as such is the biggest growth in the indicator since January 2014. It was expected that retail sales would only be up by 0.5%.
The euro/dollar didn’t manage to hold on to its hard fought peak of 1.1187 from yesterday, with a correction taking it down to 1.1118. Further movements on the pair will depend on the outcome of the ECB’s meeting today. It’s most probable that there’ll be nothing new said by the central bank: QE is starting to snap at the heels of deflationary pressures, as seen by yesterday’s inflationary growth by 0.3%; the necessity of reform in the currency union with a reduction in unemployment and the need for increased economic growth likely to be mentioned.
Data from the ADP about employment in the US will also be published today. A growth in the indicator to 198,000 is expected, whilst Canadian and US indicators for trade balance and also the non-manufacturing composite ISM will be out. The Fed will release its Beige Book report with a speech from Charles Evans, member of the FOMC, who has recently appealed for calm in relation for calls to see interest rates put up.
It’s worth looking at the statistics for oil reserves in the US from the Department of Energy. Yesterday’s API data showed an increase in reserves by 1.8 million.