International Economic Week In Review: Three Central Banks Release Minutes

Last week, three central banks released meeting minutes.The ECB reported on a fairly positive internal environment, while, for the first time in recent memory, the RBA focused on inflation. The Fed strongly hinted at a June rate hike. The remainder of the news was mostly positive.

For the first time in recent memory, Japanese economic news was positive.Industrial production increased a solid .7% M/M. And most importantly, 1Q GDP rose at a 1.7% annual pace (AR):

Exports increased at an encouraging 2.4% annual rate while household consumption rose 1.9% (AR).Unfortunately, investment contracted 5.3% (AR). But as the following table shows, underlying consumption expenditures remain weak: durable goods purchases decreased in 3 of the last 5 quarters, with two of those declines being especially sharp:

Despite this week’s good news, Japan is still in the middle of a two decade-long malaise, which is typified by a recent commercial where a company apologized for increasing prices:

There were two important EU news releases.The ECB released the minutes of their early March meeting, which contained the following observations of the EU economy:

Household income increased 1.6% Q/Q in 3Q15 and 1.5% Q/Q in 4Q15.

Household consumption growth was 1.8% Q/Q in 3Q15 and 1.5% in 4Q15.

Industrial production increased 1.8% in the January/February period from 4Q15

Retail sales rose .8% from 4Q15

Employment in 4Q15 was up 1.2% Y/Y

Wage gains were will weak, rising 1.3% in 3Q15 and 4Q15

Non-financial companies gross capital fixed formation increased 3% in 3Q15 and 5.7% in 4Q15.

Overall, the picture wasn’t nearly as bad as some analysts argue.The second data point was inflation, which was a disappointing -2% M/M.

The primary news from Australia was the release of the latest meeting minutes, which confirmed the RBA is very concerned about weakening inflation:

Members discussed the extent to which the CPI data provided a signal about ongoing inflation trends. They noted that CPI data were less subject to measurement error than many other key data series. Moreover, the lower-than-expected CPI outcome could not be explained entirely by temporary factors and in fact was significantly driven by low price rises for non-tradable items. That in turn was consistent with a range of data suggesting quite subdued growth in labour costs (which had also been a bit weaker over 2015 than previously expected).