Data out of Brazil, Italy show slowing global growth

By Edward Harrison On Jul 4, 2012

Happy US Independence Day

Daily commentary: economic data

The data today were pretty mixed. Brazil is showing more signs of slowing as industrial production there dropped for the third month in a row. What’s more is that this puts Brazil back to numbers from 2009 when we were recovering from a global recession. To me the numbers are a clear sign that Brazil is feeling the economic weakness elsewhere. As an aside, I would note that Uruguay has been weakening too although I don’t have a link for that.

The rest of the data outside the US also looks weak. In particular, the news that Italy’s deficits are widening cannot be seen as good news by anyone who wants to see the euro crisis resolved. We are well beyond the point of doubling down on more austerity in Italy despite the commentary we heard from Richard Koo about what German policymakers want. Now that yields have stabilised somewhat it may pay to look to Italy now more than Spain as any signs of debt deflation there would bring renewed crisis.

Elsewhere, UK retail sales were a mixed bag. But in the US, both housing and auto data were good. The question about so-called reverse decoupling where the US does well and others don’t is coming up a lot. I’m not a believer but the US data, while weak are better than Europe. With earnings season around the corner, let’s see how that translates into corporate numbers. I am expecting lower forward guidance as margins suffer.

That’s it. Here are the links.

Euro zone sales regain ground in May, trend still weak | Reuters

Brasil: tercer mes de caída industrial – 04.07.2012 – lanacion.com

Debt crisis: Italy’s deficit to double, but Germany’s to halve – Telegraph

El déficit de Italia sube hasta el 8% del PIB en el primer trimestre del año | Economía | EL PAÍS

Weak UK services data raises quantitative easing hopes | Business | guardian.co.uk

June auto sales point to best year since 2007 | Reuters

Biggest gain in Calif. home prices in 2 years – Lansner on Real Estate : The Orange County Register

Manufacturing Turns South – Tim Duy’s Fed Watch

Europe

FT Alphaville » Richard Koo’s semi-successful attempt to persuade Germans about balance sheet recession

The euro crisis: A just-so German story | The Economist