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Uk Consumption to Drive Growth, Investment Under Pressur

UK GDP is expected to have expanded 0.7% q/q (2.8% y/y) in Q1, slightly higher than the 0.6% q/q rise in Q4-2014. Household consumption likely remained the key contributor to GDP growth, as it has been since the beginning of the UK recovery. Net trade is also likely to have made a marginally positive contribution, leading to a smaller trade deficit. Business investment may have remained under pressure due to election uncertainty; it fell 0.9% q/q in Q4. Whether we see a rebound in investment in Q2 will depend on how quickly the uncertainty fades after the election. Regarding GDP's sectoral breakdown, the average services PMI for Q1 was higher than in Q4-2014, a signal that the recovery remains very much driven by the services sector. Industrial production is more subdued recently, especially the oil-extraction sector.

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Euro Area Consumer Confidence Likely dipped in April



The final euro-area consumer confidence index is expected to match the flash release of -4.6 in April, dropping from -3.7 prior, which was the highest reading since 2007. The main reasons for higher consumer confidence are lower energy prices and easier credit conditions for households, which support real disposable household income. Wages and salaries increased 1.1% y/y in Q4-2014 in the euro area, about 1% higher than inflation, supporting real incomes. There are also some signs that the labour market is improving. However, this is not the case for all euro-area countries. Labour markets in Germany and Spain are among the best performing, while they remain stagnant in France and Italy.

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New Zealand Has NZ$631 Million Trade Surplus



New Zealand had a merchandise trade surplus of NZ$631 million in March, Statistics New Zealand said on Wednesday. That topped forecasts for a surplus of NZ$300 million following the NZ$50 million surplus in February. Exports were down 2.0 percent on year to NZ$4.9 billion, while imports climbed an annual 4.1 percent to NZ$4.3 billion. Year to date, New Zealand has a trade deficit of NZ$2.407 billion versus forecasts for NZ$2.700 billion after coming in at NZ$2.181 billion in February.

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New Zealand Building Permits Climb 11% In March



The total number of building permits issued in New Zealand advanced a seasonally adjusted 11.0 percent on month in March, Statistics New Zealand said on Thursday - standing at 2,271, a nine-year high. That topped forecasts for an increase of 2.0 percent following the 6.3 percent contraction in February. "Townhouses, units, and retirement villages have driven the increase in new dwelling consents over the past year," business indicators manager Neil Kelly said. On a yearly basis, the total number of permits issued spiked 14.0 percent. The value of permits issued in March climbed NZ$128 million or 10 percent to NZ$1.4 billion. Individually, residential work was up NZ$125 million or 16 percent to NZ$925 million, while non-residential work added NZ$3 million or 0.7 percent to NZ$427 million. By region, there were 756 permits issued in Auckland (of which 449 were houses). Canterbury had 588 permits (of which 460 were houses) and Waikato had 219 (of which 186 were houses).

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Australia Performance Of Service Index Contracts In April - AiG



The service sector in Australia swung to contraction in April, the latest survey from the Australian Industry Group showed on Tuesday, with a Performance of Service Index score of 49.7. That's down from 50.2 in March, and it slips below the boom-or-bust line of 50 that separates expansion from contraction. Among the individual components of the survey, new orders, services sales, supplier deliveries and services businesses all contracted in April, while services employment expanded.

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New Zealand Unemployment Rate Rises To 5.8% In Q1



The unemployment rate in New Zealand came in at a seasonally adjusted 5.8 percent in the first quarter of 2015, Statistics New Zealand said on Wednesday. That missed forecasts for 5.5 percent, and it was up from 5.7 percent in the previous three months. Employment was up 0.7 percent on quarter - also missing expectations for 0.8 percent and down from 1.2 percent in Q4. On a yearly basis, employment added 3.2 percent versus forecasts for 3.3 percent and down from 3.5 percent in the previous three months. The participation rate was a record high 69.6 percent - beating forecasts for 69.4 percent, which would have been unchanged.

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Fitch: China's Slowdown As Expected, But Downside Risks Mount


Fitch Ratings says China's slower economic growth in 1Q15 is broadly as expected given efforts to rein in credit growth since mid-2014. However, downside risks from the ongoing real-estate correction and from weaker corporate hiring intentions will likely lead to further policy easing later in 2015. "China Macro Update - May 2015" is available at www.fitchratings.com

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New Zealand Overall Credit Card Spending Declines 1.1% In April



Overall credit card spending in New Zealand slipped a seasonally adjusted 1.1 percent on month in April, Statistics New Zealand said on Monday - following the downwardly revised 1.2 percent increase in March (originally 1.3 percent). Retail credit card spending dipped 0.7 percent on month in April to NZ$4.5 billion, unchanged from the previous month after it was revised up from -0.8 percent). Retail card spending also was up NZ$167 million or 3.9 percent on year. "After removing seasonal effects, spending fell in four of the six retail industries," business indicators manager Neil Kelly said. "The largest fall came from the durables industry." Transactions in the core retail industries were down 0.8 percent on month after gaining 0.6 percent a month earlier. The total value of electronic card spending - including the two non-retail industries (services and other non-retail) - was down 1.1 percent. This fall follows a 1.2 percent rise in March.


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Moody's: Currency Shifts to Widen Gap Between Global Economies in 2015-16



Robust US growth and stabilising financing conditions will help the global economy to grow more strongly next year after muted growth in 2015, with divergence between the major economies likely to widen, says Moody's Investors Service in its quarterly Global Macro Outlook report. Divergence between the major economies is likely to widen. The report "Global Macro Outlook: 2015-16. Stronger US Dollar and Shifts in Capital Flows Stoke Divisions in Global Growth", is now available on www.moodys.com. Moody's subscribers can access this report via the link at the end of this press release. Moody's expects G20 GDP growth of 2.8% in 2015, broadly unchanged from last year, before rising to around 3% in 2016. "While prospects of robust growth point to a gradual tightening of monetary policy and higher yields in the US, economic prospects are subdued in many other regions," says Marie Diron, a Moody's Senior Vice President and author of the report. "The outcome is likely to be increased divergence between those economies that have built up resilience, like the US and India, and those that are vulnerable to negative shocks, like Brazil, South Africa and Turkey." The anticipated tightening of US monetary policy comes at a time when most other central banks are easing policy or maintaining their loose stance. This unusual divergence reflects different prospects for growth and inflation around the world. This gap will fuel shifts in capital flows and currency values and affect the global economic outlook. Countries such as Turkey and South Africa are more vulnerable to the strong US dollar and the changes in capital flows that it reflects. The weaker euro and lower oil prices is forecast to give a boost to the euro area economy, with GDP growth of 1.5% in both 2015 and 2016, up from Moody's previous estimate in the last outlook. Lower oil prices and the weaker euro will boost growth in the short term. However, there is uncertainty over Greece's negotiations with its international creditors and its future membership of the euro area. A Greek exit, which is not Moody's baseline scenario, would be very negative for the Greek economy. Since the debt crisis of 2012, the European Central Bank has strengthened its ability to respond to a financial shock, while euro area countries have reduced their trade and financial links with Greece, reducing the potential impact of a Greek exit on other euro member states. In the United States, the stronger US dollar will dent growth. However, high starting levels of price competiveness, strong corporate profits and rising real incomes all still point to robust US economy activity. Moody's forecasts US GDP growth of 2.8% in both 2015 and 2016. In China, domestic factors will mainly account for economic developments. Moody's maintains its forecast that GDP growth will slow to 6.8% in 2015 and 6.5% in 2016, from 7.4% last year. Moody's sees several risks that could lead to lower growth in certain individual countries. The risks include a Greek exit from the euro area, a disorderly reaction to tighter US monetary policy and the impact of any future correction of Chinese equity or property prices. However, on their own, these would have only a limited impact on the global economy. One source of medium-term risk with potential implications for the global economy is a possible disorderly liberalisation of China's capital account. Moody's Global Macro Outlook underpins the credit rating agency's range of ratings, providing a consistent benchmark for analysts and investors.

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New Zealand Food Prices Slip 0.3% In April



Food prices in New Zealand were down 0.3 percent on month in April, Statistics New Zealand said on Wednesday. That follows the 0.1 percent increase in March and the 0.7 percent fall in February. "More discounting on items such as biscuits, snack foods, and sauces contributed to lower grocery prices. This was countered by higher prices for tomatoes, beef, and chicken," prices manager Chris Pike said. Grocery food prices fell 0.9 percent, influenced by lower prices for cakes and biscuits, snack foods, and sauces, the bureau said. The price of cakes and biscuits was influenced by more discounting on biscuits. In April, fruit and vegetable prices fell 1.2 percent. Fruit prices (down 2.9 percent) were influenced by seasonally lower prices for kiwifruit. Prices for apples also fell, with a continued supply of new season varieties. These price falls were partly offset by seasonally higher prices for mandarins. Vegetable prices (up 0.1 percent) were influenced by seasonally higher prices for tomatoes, partly offset by lower prices for carrots and cabbage. The average price of tomatoes in April 2015 was $4.81 per kilo, up from $3.49 per kilo in March 2015. This compares with an average price of $3.98 in April 2014. In April, a 0.4 percent rise in meat, poultry, and fish prices was influenced by higher prices for beef (up 4.5 percent), which are now at their highest level. Prices for chicken (up 1.8 percent) also rose. These price rises were partly offset by lower prices for processed meat (down 2.1 percent). Higher prices were also recorded for restaurant meals and ready-to-eat food (up 0.2 percent) and non-alcoholic beverages (up 0.3 percent), influenced by less discounting of packaged coffee. On a yearly basis, food prices climbed 1.0 percent, slowing from the 1.9 percent gain in the previous month. Fruit and vegetable prices increased 5.3 percent, reflecting higher prices for lettuce, potatoes, bananas, strawberries, and tomatoes. Prices for avocados, cucumber, and mushrooms decreased in the year. Restaurant meals and ready-to-eat food prices increased 1.6 percent. Meat, poultry, and fish prices increased 2.0 percent, reflecting higher prices for beef (up 9.4 percent) and chicken (up 2.3 percent). Grocery food prices decreased 1.5 percent in the year to April, influenced by lower prices for bread, cheese, snack foods, and butter. These price decreases were partly offset by higher prices for chocolate and fresh milk.

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