Positive Australia retail sales and trade balance data point to an increase in GDP while in the UK services PMI was also weaker indicating a slow start to Q2 economic activity in the country, weighed by Brexit concerns.
Today’s Economic events
- Australia HIA new home sales m/m 8.90% vs. -5.30%
- Australia retail sales m/m 0.40% vs. 0.30%
- Australia trade balance -2.16bn vs. -2.95bn
- China Caixin services PMI 51.8 vs. 52.6
- UK services PMI 52.3 vs. 53.6
- Canada building permits m/m -7.0% vs. -4.60%
- US weekly unemployment claims 274k vs. 261k
Coming up
- FOMC Member Bullard speech
Australia retail sales posts gains in March
Data from the Australian Bureau of Statistics, released earlier today showed Australian retail sales rising 0.40% in March, from February, beating forecasts of a 0.30% increase. February’s numbers were also revised higher to 0.10% against 0.0% from the previous estimates. The gains in retail sales were driven by increased spending on clothing, footwear, and personal accessories retailing, which increased 3.50% during the month. On a quarterly basis, retail sales increased 0.50%, compared to 0.60% increase seen in the previous quarter. Australia’s trade balance data also released today showed a trade deficit of A$2.163 billion in March, below forecasts of A$2.90 billion. Exports increased 4.0% on the month to A$1.084 billion while imports were up 1.0% to A$2.03 million, resulting in the trade deficit narrowing.
Commenting on the data, Capital Economics’ Kate Hickie said that the trade and retail sales figures suggest a boost to the GDP growth from the net trade, probably offsetting an easing in consumption growth in the first quarter. She said, “We estimate that real GDP growth has accelerated from the fourth quarter’s 0.60% to about 0.80% on a quarter over quarter figures“.
UK services PMI plunges to a 3-year low
In growing evidence that the UK’s economy was stalling in the start of the second quarter, today’s services PMI released by Markit/CIPS showed the services sector plunging to a 3-year low. Missing estimates of a modest decline to 53.5, services PMI in the UK fell to 52.3, marking a 3-year low and down from 53.7 in March. The weak onslaught on data which included the manufacturing PMI slipping into contraction while construction PMI is also falling to a 3-year low is signaling that the UK’s second quarter GDP likely stalled after an already slow start in the first quarter as GDP rose 0.40% as of the initial estimates.
