US and Europe: Strong economic data releases - ANZ

The research team at ANZ points that the US and Europe released strong economic data releases in the last session which suggests that all is going good for the global economy.

Key Quotes

“US industrial production and manufacturing output data for April both rose 1.0% m/m. That was the strongest monthly rise in industrial production in three years. Capacity utilisation, at 76.7%, rose to its highest level since August 2015. The data point to a healthy start to output growth in Q2. April housing starts fell 2.6% m/m following a revised 6.6% m/m drop in March. The market was going for a 3.7% m/m rise. The data are volatile and may have been influenced by the timing of Easter.”

“Euro area Q1 GDP was confirmed at 0.5% q/q, with Finland and the Baltic members leading the charge with growth rates around 1.5% q/q. Germany grew 0.6% q/q and Spain grew 0.8% q/q. Yet there is a wide discrepancy with other members, with French growth of just 0.3% q/q and Italian growth of 0.2% q/q.”

“The German May ZEW current conditions index rose to 83.9 (80.1) with expectations at 20.6 (19.5). The EA ZEW expectations index rose to 35.1 versus 26.3.”

“UK April CPI rose to 2.7% y/y with core rising to 2.4% y/y. The headline rate is very close to the peak the BoE expects in Q4 (2.8% y/y) and if the data keeps climbing it may challenge its tolerance on inflation. The downside is that the rise in inflation will squeeze real income growth (nominal wages +2.2% y/y ex bonuses), weighing on private consumption and consumer demand.”