According to figures from the Labor Department released on Friday consumer prices in the US dropped by 0.2% in June however the core figure, which strips out food and energy costs, climbed 0.3%.
Industrial production in the US increased in June according to figures released by the Federal Reserve on Friday. The 0.2% rise from 0.1% in May was a touch less than analysts were expecting though.
Meanwhile the Empire State Manufacturing Index revealed a deterioration for the second month in a row remaining below zero at -3.8 in July from 7.8 in June.
Attention will now focus on the results of the European Union bank stress tests which are due out 4.00 pm (London time).
Earlier in the week…
Financial investors had a lot to digest on Monday morning: poor US non-farm data (just 18,000 jobs created in June), a jump in Chinese inflation (pork prices) and a eurozone continuing to look extremely wobbly at best (Italy). No surprise then that the majority of the world’s stock indices recorded significant losses at the start of the week. The FTSE 100 ended Monday 61.42 points down at 5929.16 and Tuesday 60.20 points off the pace at 5868.96. The Dow Jones shed 151.44 points to finish at 12,505.76 on Monday and, despite Alcoa kicking off the earnings season by announcing a doubling in profits, lost a further 58.88 points on Tuesday to rest at 12,446.88 at the close.
The FTSE 100 bounced back Wednesday and gained 37.47 points to finish at 5906.43 as investors got their appetites back for mining stocks following another robust Chinese GDP number. Wednesday was a better day too for the Down Jones which clawed back 44.73 points to end the day at 12,491.61 points.
China: inflation rises; GDP eases a bit but is still robust
China’s consumer price index rose 6.4% from a year earlier in June, a marked jump from May’s 5.5% increase. Pork prices rose 57.1 per cent from a year earlier. Pork is China’s favourite meat and accounts for 10% of the whole CPI figure. Non-food prices rose 3 per cent from a year earlier in June in a sign that inflation has become entrenched more widely throughout the economy.
The Chinese economy grew by 9.5% in the second quarter of this year which slightly higher than the 9.3% forecast. Even though the figure was less than the first quarter's 9.7% growth, investors will have taken this as a sign that there’s plenty of life left in the Chinese economy yet.
UK: retail sales improve in June; inflation and unemployment fall
According to the British Retail Consortium UK year-on-year retail sales improved to -0.6% in June from the drop of -2.1% seen in May. Core inflation in the UK dropped surprisingly to 2.8% from 3.3% while unemployment fell 26,000 to 2.45 million according to the Office for National Statistics.
US: FOMC minutes revealing; retail sales recover
The latest minutes from the Federal Open Market Committee in the US revealed that they thought the economic recovery ‘is continuing at a moderate pace’, though ‘somewhat more slowly’ than expected.
‘More recently, however, against a backdrop of disappointing economic data, heightened uncertainty about the situation in Europe, and, possibly, concerns about the US federal debt ceiling, market participants reported a general pullback from risk-taking and a decline in liquidity in a range of financial markets,’ the minutes surmised.
Indeed, on Thursday credit rating agency Moody’s put the US on review citing that the debt-ceiling negotiations lacked ‘meaningful’ progress.
According to figures released by the Commerce Department US retail sales unexpectedly increased in June to $387.8 billion which was a 0.1% increase from the previous month. US initial jobless claims fell by by 22,000 to 405,000 from the previous week's revised figure of 427,000.