Last week it was weak China. This week it is Europe, from Westpac:
Euro Area GDP disappointed at the margin in Q3, coming in at 0.3% against expectations of a 0.4% gain.
The softer impulse was broad based: Germany and France both saw modest gains of 0.3%, while Italy was weaker at 0.2%; in contrast, Spain continued to outperform, Q2’s 1.0% gain followed by a 0.8% rise in Q3.
Having record-low levels of unemployment and benefitting from external demand and strong confidence, recent outcomes for Germany are of concern. In short, households and corporates seem unwilling to spend.
In contrast, France’s labour market remains very weak, with historically-high unemployment. Growth is being driven by consumption and public demand, neither of which have strong support from incomes.
For France, without a material change in investment and employment, momentum is likely to ebb as we enter 2016.
A similar case can be made for Italy. Investment growth is non-existent; the consumer largely unwilling; and the fiscal balance under pressure.
Broadly across the region, the improvement in credit availability and its cost has been significant, boosting consumption for a time.
Yet this impetus will inevitably fade if income and confidence cannot be bolstered sufficiently to spark the use of credit to accelerate real activity.
And Japan, from Forexlive:
GDP (seasonally adjusted), preliminary, q/q: -0.2%
- expected -0.1%, prior -0.2%, revised from -0.3%
GDP Annualized (seasonally adjusted), preliminary y/y: -0.8%
- expected -0.2%, prior -0.7%, revised from -1.2%
GDP Nominal (seasonally adjusted), preliminary q/q: 0.0%
- -0.2% expected %, prior +0.2%, revised from +0.1%
GDP Consumer Spending y/y, preliminary q/q, +0.5%
- expected is +0.4%, prior was -0.6%, revised from -0.7%
GDP Business Spending y/y, preliminary q/q: -1.3%
- -0.5% expected, prior was -1.2%, revised from -0.9%
And each results in the same thing, more stimulus, some of it monetary, and enough that even more pressure is applied to the US dollar as other reserve currencies sink:
Add US tightening and it’s a bull market.
