US existing home sales dropped unexpectedly, -5.4%m-m. Housing is in a recovery very a very low base, but we maintain that the current rate of growth in starts is not able to offset other headwinds from incomes and capex slowdown. The Conference Board's Leading Economic Index suggested weakness in 2H12 as it declined 0.3%m-m, according to the managers of the indicator it suggests no strengthening of the US economy over the next few months.
In UK, retail sales dropped 0.5% m-m in June, compared to the 1.0% m-m gain in May 2012. Retail sales excluding auto fuel fell by 0.1%, compared to the 0.9% m-m gain. On y-y basis, retail sales including and excluding auto fuel rose by 1.9% and 2.9% respectively. The Bank of England said this week that economic growth this year will be “roughly flat.” It also said it’s “less likely” inflation expec tations will become ingrained in the economy. The nation’s inflation has stepped down to 2.4% in June from May’s 2.8%, moving towards the government target inflation of 2.0%.
Japan’s all industry index declined by
0.3% m-m in May, reversing the 0.1% gain in April. Tertiary industry advanced 0.7% m-m, compared to the 0.2% m-m drop in April. Manufacturing dropped significantly by 3.4% m-m in May, after the 0.2% m-m in April, reflecting the weakening demand as the effect of post quake reconstruction faded away and Europe turmoil continued.
In Australia, a gauge of business conditions index for the next three months dropped to 5, the lowest reading since the second quarter of 2009, and the second-quarter confidence index slipped to minus 2, the lowest since the third quarter last year, as Europe’s fiscal crisis weighs on sentiment and restrains hiring. RBA has cut the benchmark rate by an total of 125 bp since late last year and does have more scope for further loosening thanks to the eased inflation.
Hong Kong’s unemployment rate for the 3 months period ended in June stayed unchanged from the period ended in May, at 3.2%, though the market expected a higher 3.3%. According to the Financial Secretary’s Office, the Tourist spending, domestic demand and infrastructure projects have helped the city to maintain almost full employment. The region’s economic growth has slowed down tremendously as a result of weakening demand from China. Going forward, as Beijing government would likely conduct more actions to bolster economy, the growth of Hong Kong may pick up in the second half of 2012.
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