Monday, August 4, 2014

Data Releases for July 2014

I’m back from my usual Ramadhan blogging sabbatical. It’s been a bittersweet month – the economy is chugging along better than I ever hoped for and the German demolition of Brazil in the World Cup semifinals was a hoot to watch, but then there was the staggering blow of the MH17 tragedy and the incomprehensible Israeli invasion of the Gaza strip on the very same day. Geo-political risks appear to be increasing, while the global economy remains on a fragile footing, the US recovery notwithstanding.

Just some quick bites from data releases over the past month that I haven’t commented on, before I get back to fuller coverage of the economy in posts to come:

June 2014 CPI

The CPI rose 0.2% in June over May 2014 and 3.3% over June 2013 (log annual and monthly changes):

01_cpi

However, on an annualised basis, the monthly change in the CPI translates to just a 2.2% increase. All of the June increase in prices came from just 2 sources – food (as usual) and healthcare. Again, there’s little evidence of a broad based increase in prices, which suggests again that inflation won’t be a primary factor behind interest rate “normalisation”.

May 2014 Employment

After nearly a year of pretty poor job growth, employment picked up strongly over the last couple of months (‘000):

02_emp

That fits with the other data coming in. I think businesses are starting to believe the pick up in economic activity can be sustained and have started hiring again. Unemployment has fallen to the 3.0% level again, while the LFPR has begun to climb (also again).

GDP by income approach 2005-2013

I attended a briefing a couple of weeks back on the new GDP by income approach statistics issued by DOS. At the moment its on a sector approach only i.e. supply side, but I’m told that income by institution (government, corporations and households) will follow this month, though only up to 2010. The latter is to my mind more useful, containing as it does critical information like disposable income and savings, but beggars can’t be choosers.

The most interesting thing about the new series (to me anyway) is the information on employee compensation, which has risen to 33.6% for 2014, which marks the 4th straight year that the share of income going to labour has risen, and the first time its ever exceeded one third of national income.

We’re still well below the mark of advanced economies, which typically have a labour share of income exceeding 50%, but the improvement – slow as it is – is still encouraging. Now, if I can only figure out WHY it’s increasing.

May 2014 Industrial Production

May’s industrial production numbers were good; really, really good (log annual and monthly changes; seasonally adjusted; 2005=100):

03_ipi_gr

04_ipi_grc

Don’t look now, but we might see real GDP growth exceeding 6.0% again for 2Q2014 (my IPI-only forecast model says 7.0% (!!)). Did I remember to say the numbers were really good? They were really good.

I’m not as (statistically) confident about 2Q2014 GDP growth as I was with the 1Q2014 numbers, but let’s just say that the 2014 forecast issued with the government budget a couple of months from now might need to be bumped up a tad. What might temper full year growth numbers might be the base effect from the 4Q2013 – this year’s fourth quarter growth is likely to look pedestrian as a result. Make no mistake though – growth this year will be much stronger than I hoped for or looked for.

Technical Notes:

All data from the Department of Statistics:

  1. June 2014 Consumer Price Index report
  2. May 2014 Employment report (warning: pdf link)
  3. GDP by income approach 2005-2013
  4. May 2014 Industrial Production (warning: pdf link)

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