There were lots of economic data yesterday but little to cheer about.
Bloomberg reports that US consumer spending and income fell in July after adjusting for inflation.
U.S. consumer spending grew at a slower pace in July as the impact of the tax rebates faded and a pickup in inflation eroded Americans' buying power.
Purchases rose 0.2 percent, one-third the pace in June, the Commerce Department said today in Washington, while prices surged the most in 17 years...
Incomes dropped 0.7 percent, the first decrease since August 2005, reflecting the end of the rebates, after a 0.1 percent gain the prior month. The median projection was a decline of 0.2 percent...
The Commerce Department report's price gauge tied to spending patterns jumped 4.5 percent from July 2007, the biggest 12-month gain since 1991.
The Federal Reserve's preferred gauge of prices, which excludes food and fuel, climbed 0.3 percent for a second month. The so-called core price measure was up 2.4 percent from a year before, the most since February 2007...
Adjusted for inflation, spending plunged 0.4 percent, the biggest drop in four years...
Disposable income, or the money left over after taxes, decreased 1.1 percent. Adjusted for inflation, it fell 1.7 percent after declining 2.6 percent in June.
However, consumer sentiment and a measure of business activity improved in August.
The Reuters/University of Michigan final index of consumer sentiment was at 63 this month, from 61.2 in July...
A separate private report indicated business activity advanced in August as commodity prices retreated from record levels. The National Association of Purchasing Management-Chicago said its business index increased to 57.9 from 50.8.
The outlook for the economy remains negative though. From Reuters:
The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index fell to 125.5 in the week to Aug. 22 from 125.8 in the previous period, revised from 125.9.
Its annualized growth fell to negative 11.8 percent to match its lowest mark since the week to June 13, 1980. The previous week this gauge was at minus 11.5 percent, revised from minus 11.4 percent.
Japanese data yesterday also looked somewhat gloomy yesterday. While housing starts rebounded in July, other data provided little reason for optimism. From Bloomberg:
Japan's inflation rate exceeded 2 percent for the first time in a decade as prices of food and gasoline surged, sapping household budgets in an economy that may already be in a recession.
Core prices, which exclude fresh food, climbed 2.4 percent in July from a year earlier after rising 1.9 percent in June, the statistics bureau said today in Tokyo. Household spending fell 0.5 percent from a year earlier, a fifth monthly decline...
The ratio of jobs available to applicants slid for a sixth month to 0.89, the lowest since October 2004, the Labor Ministry said. The jobless rate fell to 4 percent from 4.1 percent.
The Japanese government feels compelled to intervene.
The government announced it will spend 2 trillion yen ($18 billion) to help businesses and individuals cope with rising energy and material costs...
Today's economic package included reductions in highway tolls, projects to help temporary workers find permanent jobs, and financial support for transport companies. The government also said it plans to cut taxes for low-income earners.
A positive number on July industrial production doesn't seem to have carried much weight.
Industrial production unexpectedly rose 0.9 percent from June, when it fell 2.2 percent, the trade ministry said. The increase wasn't enough to revise the government's assessment that output is weakening as export growth slows.
Perhaps understandably so in the light of the latest manufacturing PMI reported by Reuters.
The Nomura/JMMA Japan Purchasing Managers Index, which gives an early snapshot of the health of manufacturing, edged down to a seasonally adjusted 46.9 in August from 47.0 in July. In June the index hit the lowest in more than six years at 46.5.
European economic data yesterday also pointed to a softening economy. Bloomberg reports:
Europeans' confidence fell more than forecast this month as the economy teetered on the brink of a recession.
An index of executive and consumer sentiment in the economic outlook dropped to 88.8 from 89.5 in July, the European Commission in Brussels said today. That is below the 89.3 median estimate of 26 economists surveyed by Bloomberg News...
Inflation eased to 3.8 percent from 4 percent, according to a separate report today...
Confidence among euro-area manufacturers fell more than economists forecast to minus 10 this month from minus 8 in July, while sentiment among retailers also declined, according to today's report from the commission. Consumer confidence rose 1 point from July's minus 20, staying close to a 5 1/2-year low. Spanish retail sales fell for an eighth month in July, while in the U.K., consumer confidence stayed near a record low in August, GfK NOP said today.
In the euro area, unemployment remained at 7.3 percent in July, another report showed.