There was no overarching theme to this week’s major international data, although two potential story lines are developing.Japan is clearly in trouble; it’s latest economic numbers show a stalling economy. But on the other side of the world, the impact of Brexit may be less than the recent dive in business sentiment indicators shows, especially in the EU. 

The Reserve Bank of Australia released their latest meeting minutes, where the consensus GDP growth estimate was 2.5%-3.5% for the next year. They projected unemployment to remain near the current 5.7% level. While they forecast households will continue spending at robust rates, they expect weak business investment. The lower dollar should spur exports. Both new and existing home sales would increase but at lower rates. Price pressures were “subdued,” which may explain why the RBA cut rates at their last meeting.In other news, the unemployment rate remained steady at 5.7%. 

Japanese news continues to disappoint. The first reading of 2Q GDP was a very disappointing .2% Q/Q pace. Personal consumption only grew .2% while business investment contracted for the second consecutive quarter, this time by .4%. The following chart shows the annual pace of GDP growth has been, at best, inconsistent for the last few years: 

And while industrial production increased 2.3% M/M, it was down 1.5% Y/Y.  Japan is an economy clearly in trouble. 

UK inflation rose .6% Y/Y. Although this was the highest reading since 7/14, it still gives the BOE plenty of policy room should they want (or need) to engage in additional stimulus. PPI increased .3%, the first rise in 2 years. The best news was the very strong retail sales figure which showed a Y/Y increase of 5.9%. This figure was post-Brexit, indicating that the UK consumer is still spending.

While EU exports increased, they did so due to a mathematical curiosity; exports declined 2% while imports decreased 5% (both figures Y/Y).But as this chart from the report shows, both of these figures have moved sideways for the last 2 years:

EU inflation continues to be weak, only increasing .2% Y/Y in its latest reading.Most troubling, 12 EU countries still have negative inflation rates.Finally, construction for the euro area was stable.     

The news from Japan was deeply concerning; it indicates the economy is in trouble. However, the news from the other side of the globe was hopeful: the UK consumer continued to spend, potentially mitigating a post-Brexit business slowdown. And the EU continues to grow at a moderate but sustained rate.