Mixed economic data, no inflation

There were more signs on Friday that the Japanese economy is turning around. From Bloomberg:

Japan’s demand for services rose unexpectedly in June as government stimulus measures spurred consumer spending, another sign that the economy is emerging from a recession.

The tertiary index, which captures 63 percent of the economy, climbed 0.1 percent from May, when it slid a revised 0.3 percent, the Trade Ministry said today in Tokyo. The median estimate of surveyed was for a 0.3 percent drop.

However, US economic data were more mixed than usual. From Reuters:

The Reuters/University of Michigan Surveys of Consumers said on Friday its preliminary reading of the index of confidence fell to 63.2 from 66.0 in July, well below market expectations for a reading of 68.5...

Separately, industrial output rose 0.5 percent, beating market expectations for 0.3 percent advance, after a 0.4 percent contraction in June. Aside from a hurricane-related rebound in October 2008, it was the first monthly gain since December 2007, the Fed said...

In another report, the Labor Department said U.S. consumer prices were flat in July and dropped over the past 12 months at the fastest rate since 1950...

Stripping out volatile energy and food prices, the closely watched core measure of consumer inflation rose 0.1 percent in July after increasing 0.2 percent in June.

Meanwhile, consumer prices in the euro area continued to fall in July. Bloomberg reports:

European consumer prices dropped more than initially estimated in July as energy costs decreased and rising unemployment prompted households to cut spending.

Prices in the 16-member euro region fell by a record 0.7 percent from the year-earlier month after declining 0.1 percent in June, the European Union statistics office in Luxembourg said today. The decline exceeded the 0.6 percent estimate published on July 31 and the median forecast of 30 economists surveyed by Bloomberg News. In the month, prices declined 0.7 percent.

Still, with economies gradually moving out of recession -- the latest reported case being Hong Kong -- more central banks are talking about raising interest rates. Bloomberg on the RBA's latest musings:

The Reserve Bank of Australia will have to raise the benchmark interest rate from its “emergency” level at some stage as the economy rebounds from the global recession, bank Governor Glenn Stevens said.

“There will come a time when the exceptional monetary stimulus in place at present will no longer be needed,” Stevens said in his half-yearly testimony to parliament’s economics committee in Sydney today. “It will then be appropriate for the board to do what it has done on past such occasions, namely to start adjusting interest rates back towards normal levels.”